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GROUP 4 - MARKETING B
AN ANALYSIS OF INDIAN RETAIL INDUSTRY
SUBMITTED TO: Dr. Ramanna Shetty DATE OF SUBMISSION: 11.03.2010
Submitted by Debjeet Dey Devshree Divas Gupta Jagdeep Kaur Manu Mathew
ALLIANCE BUSINESS SCHOOL 2009-2011 Page 1 PGP
GROUP 4 - MARKETING B
We wish to sincerely express our gratitude to all those who helped us in achieving this moment of writing the Project Report on Retail industry for submission under the course of Industrial Analysis. We would like to thank, Dr. Ramanna Shetty– Our Course coordinator for providing the opportunity to work on the project and always being there to help on any issue. This experience has enriched our knowledge in the concerned subject. Thank you
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GROUP 4 - MARKETING B
We, the members of Group 4, Marketing Section B, PGP 1, 2009-2011 would like to declare that the project on “Retail Industry” is an exclusive & detailed analysis carried by us. The information, facts & figures in the report have been taken from reliable sources such as Capitaline, Annual reports of companies & corporate websites. This work is different from other similar industry analysis & it truly represents our work.
ALLIANCE BUSINESS SCHOOL 2009-2011 Page 3
Name of Faculty Guide: Prof.RETAIL INDUSTRY GROUP 4 . Ramanna Shetty Signature ALLIANCE BUSINESS SCHOOL 2009-2011 Page 4 PGP .MARKETING B CERTIFICATE This is to certify that Group 4 of Marketing B has completed the project “Retail Industry ” under my guidance for the partial completion of the course: Industry Analytics term III PGP in Management Aug (2009-11).
..36 3........................................33 3.........................1.....6...........................................................41 3......................................................................................................................................................................34 3.....................3 Gems and Jewellery retail:........30 3....................................1 FDI in Retail not permitted ......................................................36 3.......................................................4 Pharma retail:.......2....................26 2 OBJECTIVES..................................................................5 PEST Analysis:...........................................................................................................................................1..............................5 Evolution in Organized Retail ................................................................................................................4 Key Points of Indian Organised Retail Industry...3 Structure of Indian Retail Sector .......................................................MARKETING B Table of Contents Executive Summary.....................................4 Porter's Five Forces Analysis..16 1..6..5 Music and Book Retail:.........................2 Indian Retail Industry....................................30 3......................................18 1..........1.................1.....22 1.............................................................................44 3.................................1..26 1.35 3..............................................47 ALLIANCE BUSINESS SCHOOL 2009-2011 Page 5 PGP ........................................6 Role of Foreign Direct Investments.........6 SWOT ANALYSIS............3 Benefits of FDI.1....................................................................................................20 1.............2 Apparel retail:........1 Food and grocery retail:.....................................................................................26 1.............................................................RETAIL INDUSTRY GROUP 4 ....................................32 3.....3 Market share:......1 Global Retail Scenario:...................21 1.............................................................................2 Current FDI ............................................................................................34 3....................................12 1..........1 India’s Retail Potential........................................................................11 1.............................................41 3.............25 1.............................................28 3 Industry Analysis......................................6.............6 Consumer durables retail:...9 1 Introduction:............................................1 Segment wise....2 List of Retail Companies in India:................................................................
.................................................................1 Profitability:..........................................2..65 4.........................................100 ALLIANCE BUSINESS SCHOOL 2009-2011 Page 6 PGP ...................................2..............................................3 Conclusion:................................................................87 5..................................................................55 4...................................................................................97 6..........1 SHOPPERS STOP...........................3 Trend Analysis: Simple Linear Regression..................................2 Ratio Analysis:.......................................RETAIL INDUSTRY GROUP 4 ................7 Market concentration: ..................................................................................................................2 Recommendations ......................3 VISHAL RETAIL ..................................................................................................................................78 5.................2 PANTALOON RETAIL ..............1 Quantitative Analysis:.................................................................................52 4 Company Profile: .................................1 Herfindahl Index.............................................................................................................................................................50 3.................1..................97 6.......................98 Bibliography:.............................68 5 Comparative Analysis and Interpretation:..............................1........3 Advertising:..................1 SWOT Analysis:.....................55 4....................50 3...................................4 TRENT LIMITED......................................................................................................................................................7..........73 5.............87 5...................94 6 Recommendations and Conclusion:...............................................73 5.................................72 5.1...................................................8 Industry Challenges:.........2 Pricing:......................................................97 6....................2..............................................................................2 Qualitative analysis:.....92 5...........83 5..MARKETING B 3..............1 Future outlooks.60 4.....................................................................................
..................33 Figure 3.......................19 Sales Graph for all Major Companies in (crs).................84 Figure 5.............5 Employment Generation by Retail sector in india.......81 Figure 5...................24 Figure 1.............................................................................20 Net Profit Graph for all Major Companies in (crs)......8 Evolution of Indian Retail....................................76 Figure 5.................................................41 Figure 5.......75 Figure 5......................12 Figure 1..............................4 Indian Retail industry contribution to GDP................34 Figure 3...........17 Figure 1....................................25 Sales Trend Graph for all major companies (crs)........................................25 Figure 3...........23 Figure 1..21 ROCE Graph for all Major Companies ...........................................................................................................................................14 Major players of Gems and Jewellery segment..................................2 organised Retail Sector in the world.............................74 Figure 5...................................................23 Debt-Equity Ratio Graph for all Major Companies.........................................3 Organised Retail with respect to total Retail...................RETAIL INDUSTRY GROUP 4 ...................15 Major players of Pharma segment..........10 FDI In Retail allowed.....................................................18 Market share of major players in Indian retail industry.................................1 Global Retail Scenario.35 Figure 3..................................26 Profit Trend Graph for all Major Companies in (crs).................................................................12 Major players of Food and Grocery segment .......................13 Major players of Apparels segment ....24 Current Ratio Graph for all Major Companies..19 Figure 1...............................................80 Figure 5.............................18 Figure 1...............14 Figure 1.........................................11 Segment wise contribution in Retail Sector......35 Figure 3....................22 RONW Graph for all Major Companies .......................................................................................16 Major players of Books and Music segment.....32 Figure 3................15 Figure 1.85 ALLIANCE BUSINESS SCHOOL 2009-2011 Page 7 PGP ...........17 Major players of consumer durables segment........................77 Figure 5........................................................................................................9 Penetration of Retail sector .......................................................................................MARKETING B List of Figures Figure 1............16 Figure 1...............................................................36 Figure 3........................33 Figure 3......................................................................6 India’s Retail potential..7 Indian Retail Scenario...................
. of stores.MARKETING B List of Tables Table 1..............................51 Table 5.........73 Table 5..........................40 Table 3..........................................8 ROCE Percentage of all Major Companies...14 Comparing Advertising Strategies of the four companies.............................94 ALLIANCE BUSINESS SCHOOL 2009-2011 Page 8 PGP .........................................1 Share of organised Retail sector...............76 Table 5..............................3 Advantages of conventional and Morden organised Retail Formats...................................................................RETAIL INDUSTRY GROUP 4 ...........................12 Sales Trend of all Major Companies in (crs)....22 Table 3...14 Table 1..77 Table 5.........................................6 Sales of all Major Companies in (crs)........10 Debt-Equity Ratio of all Major Companies ..........................83 Table 5...............................................................................................................13 Table 1...........................................................................9 RONW Percentage of all Major Companies .........................................85 Table 5.......2 World Total Retail sector and Percentage in organized sector.........................13 Profit Trend of all Major Companies in (crs)......................................5 Market share .......74 Table 5.............7 Profit of all Major Companies in (crs)......... Formats and Brand names ..............................79 Table 5.........................................................11 Current Ratio of all Major Companies ..............................................81 Table 5............................................................4 TOP Major Players in retail in India with respect to No.
The study provides an insight into the factors propelling the growth of organized retail in India. The analysis of this industry. Emergence of key players like Shoppers’ stop. Now organized retailing is slowly emerging in the form of malls and hypermarkets. pricing strategy. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 9 PGP .RETAIL INDUSTRY GROUP 4 . Through this report.MARKETING B Executive Summary The Indian Retail industry is a significant contributor to the GDP of India. an attempt is made to study the growth and sustainability of organized retail both from the customer view point and the industry viewpoint. The kirana stores and the local mom and pop stores were very popular among the consumers. The industry earlier comprised of unorganized retail. Even this study focus on the role of FDI in India and what are the challenges facing by this industry. It adds to the fashion quotient and lifestyle of the people. etc. Pantaloon. The industry is in a transformational form as there is a shift from unorganized retailing to organized retailing. It also provides many employment opportunities in the country. has changed the face of retailing in India. by both quantitative and qualitative aspect. Vishal. Advertisement and Market leader of the Retail sector in India. These outlets have a huge advantage over the next door kirana stores in terms of better financial position and superior technological facilities.
1 INTRODUCTION ALLIANCE BUSINESS SCHOOL 2009-2011 Page 10 PGP .MARKETING B CHAPTER.RETAIL INDUSTRY GROUP 4 .
etc. There are major players like Shoppers Stop. from a fixed location such as a department store or kiosk. Over the past few years. etc. as markets like China become increasingly saturated. The Retail sector in India is worth USD 394 billion and is growing at the rate of 30% annually. This can be attributed to the penetration of organized retailing in India. The industry which traditionally comprised of mom and pop stores spread hither and thither is in the revolutionary phase in the present era. India has the 4th largest economy with respect to the GDP (in PPP terms) and is expected to rank 3rd by 2010 just behind US and China. The retail sector is expanding and modernizing rapidly in line with India’s economic growth. Pantaloons.RETAIL INDUSTRY GROUP 4 . Retail is one of India’s largest industries. who. the retail sales in India are hovering around 33-35% of GDP as compared to around 20% in the US. It has not only modernized the economy but also contributed to middle class’ savings. It is an interface between the producer and the individual consumer buying for personal consumption.MARKETING B 1 Introduction: Retailing includes activities accompanying to selling to ultimate consumer for their personnel family and household use. in small or individual lots for direct consumption by the purchaser. India is the next favourite foreign investment destination currently. They also have an upper hand in case of financial and technology support as compared to the unorganized retail outlets. According to AT Kearney. It has come a long way with the emergence of modern retail outlets such as malls. Middle class is the dominating income ALLIANCE BUSINESS SCHOOL 2009-2011 Page 11 PGP . speciality stores. contributing to about 12 per cent of the GDP and providing employment to 8 per cent of the nation’s workforce. even though very small in number have changed the face of retailing India. These organized retailers have posed a threat to the traditional retail stores.
The opportunities in organized Indian retail sector are also expected to grow over the next few years. The fact that 47 of the Global Fortune 500 companies & 25 of Asia’s Top 200 companies are retailers is a matter of pride to the Retail sector. It generates about 22 million jobs. It also generates a huge amount of employment as compared to any other sector. Figure 1. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 12 PGP .RETAIL INDUSTRY GROUP 4 . It is worth US$ 9 trillion (figures as of 2007) and is still growing.1 Global Retail Scenario Courtesy: www.S retail industry is one of the largest industries in the world. It is the second largest among other industries in the US.1 Global Retail Scenario: Retailing sector contributes to about 27% of the world’s GDP and has the largest number of establishments in the world.MARKETING B group in the entire population.com . 1.fibre2fashion. The U.
Actually this percentage breakup can even be an indicator of the level of economic development of a country.7 2002 180 3.1 0. European Union and Japan. constitute the organized retail segment.1 Share of organised Retail sector Total retail (US$ billions) Organized retail (US$ billions) Share of Organized retail in % Courtesy: CSO MGI study 1999 150 1.K. Economies of countries like Singapore. Nevertheless. etc. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 13 PGP . Malls. Supermarkets. Mexico. Retailing all over the world can be divided into two basic categories: • Organized retail • Unorganized retail Unorganized retail refers to the Local Mom and Pop stores.RETAIL INDUSTRY GROUP 4 . etc.2 The above table indicates the growth of organized retail in the world as a percentage of the total retail. organized retail is steadily growing. Unorganized retail dominates developing countries. Table 1. are also greatly dependent on the retail sector. Malaysia. Sri Lanka. but also in other developed countries like U. Hypermarkets.8 2005 225 7 3.S. Thailand.MARKETING B The growth in retail sector is not only evident in the U. The percentage breakup of organized and unorganized retail varies from country to country all over the world. Developed countries have more organized retail than unorganized retail. the trend is vice – versa. In the developing countries.3 1.
European Union and Japan together constitute 80% of the total organized retail in the world. there is more scope for future expansion as against the developed countries which may suffer from saturation. Growth of organized retail in these countries is at a much faster pace than that in developed countries.K FRANCE GERMANY INDIA BRAZIL RUSSIA PAKISTAN Courtesy: CSO MGI study Total Retail 2983 1182 785 475 436 421 322 284 276 67 Organized Retail 85% 66% 20% 80% 80% 80% 5% 36% 33% 1% ALLIANCE BUSINESS SCHOOL 2009-2011 Page 14 PGP .2 World Total Retail sector and Percentage in organized sector USA JAPAN CHINA U. But.2 organised Retail Sector in the world Courtesy: CSO MGI study The breakup of organized retail among the developed and developing countries is as shown below.RETAIL INDUSTRY GROUP 4 .MARKETING B Figure 1. the developing countries are not to be neglected. Table 1. Developed countries like the US. This is because in the developing countries.
GROUP 4 - MARKETING B
The above table shows organized retail as a percentage of total retail in different countries. It is evident that developed countries like USA and UK have a higher percentage of organized retail than the developing countries like Brazil, China and Russia. India and Pakistan have to go a long way to match the other countries. Pakistan has the least percentage of organized retail as compared to the other countries mentioned above (1%) while India is no better off at 4%. The graphical depiction of the above table is as shown below. Here, the organized retail is given in terms of US$ rather than as just a percentage of total sales.
Figure 1.3 Organised Retail with respect to total Retail
Source: Planet Retail and Technopak Advisers Pvt. Ltd. In short, there is a lot of scope for growth of organized retail in developing countries. India and China are the targets. Growing population, increasing incomes and higher purchasing power in these countries will drive the growth of this sector. Some top retailers in the world are:
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1. The WalMart group, Inc 2. Carrefour group 3. The Kroger Co. 4. The Home depot, Inc
GROUP 4 - MARKETING B U.S FRANCE U.S U.S GERMANY
5. Metro Courtesy: STORES/Deloitte Touche Tomahatsu
1.2 Indian Retail Industry
Retail is a buzz word in India of late. The Indian Retail industry is the second largest employment provider in the country after agriculture. It contributes 12% to the GDP of India and at the same time generates 8% of employment in the country.
Figure 1.4 Indian Retail industry contribution to GDP
Courtesy: CSO MGI study
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GROUP 4 - MARKETING B
Figure 1.5 Employment Generation by Retail sector in india
Courtesy: CSO MGI study The Indian Retail industry was worth US $511 billion at the end of 2008. It is expected to post a Compounded annual growth rate of 13.2% which will place it at US $640 billion in 2010. Indian economy is the 4th largest in the world in terms of GDP. It is expected to become the 3rd largest by the end of 2010 by ousting Japan. With the saturation of the Chinese market, India is the next favorite destination for Foreign Direct Investment. Retail sales in India constitute around 33 – 35% of the GDP where as in US, retail sales makes up for 20% of the GDP. US has more of organized retail than unorganized. China is on the path of progress in terms of organized retail. India on the other hand, has about 2- 3% of organized retail while the rest is just filled with unorganized retail.
Source: Economist, Let gradualism guide FDI in retail, 2006.
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It also involves lesser risk than China and Russia and almost on par with Brazil. The risks involved include economic and political risks. India is rated as the most attractive Investment destination in Retail for three consecutive years 2005. 2006 and 2007. In short. Market potential. India has the highest market potential. The Indian Retail industry has grown tremendously in the past few years. India is the most favourite destination for future retail investments. Some of them are: Changing consumer profile and demographics Credit availability ALLIANCE BUSINESS SCHOOL 2009-2011 Page 18 PGP . Angel Research The above diagram shows the position of various countries with respect to market potential for retail and the risk involved in the country. Brazil and Russia.MARKETING B 1. even ahead of China.1 India’s Retail Potential Figure 1.2. According to the A T Kearney study on Global Retail Development Index (GRDI). etc. There are many drivers of this growth. According to GRDI 2008. India has topped the study that ranks 30 Emerging countries on parameters like Country risk.RETAIL INDUSTRY GROUP 4 . India has maximum retail potential among the Top-5 attractive retail destinations. Market attractiveness.6 India’s Retail potential Source: ICRIER Retail Report 2008.
medium and small grocery stores and drug stores constitute the unorganized retail sector. Large.RETAIL INDUSTRY GROUP 4 .7 Indian Retail Scenario Courtesy: CSO MGI study Unorganized retail grabs a major share in Indian retail while organized retail accounts for a mere 5%. Indian retail industry is characterized by the widely dispersed retail outlets situated at every nook and corner all over the country. kirana stores and the street hawkers are also a part of the unorganized retail in India. The paanwalas. The presence of a large number of small players has made the Indian retail industry one of the most fragmented industries in the world.MARKETING B Improvement in infrastructure Technological innovations Liberalized government policies Efficient supply chain management methods Indian retail scenario can be broadly classified into two categories: Organized retail: The new face of Indian retail Unorganized retail Figure 1. Organized retailing in the form of malls and supermarkets is finding its way into the Indian ALLIANCE BUSINESS SCHOOL 2009-2011 Page 19 PGP .
Nevertheless.An Asian Perspective. the mall culture is growing in India. The youth are the main propellers of this growth. The rest of India still remains an untapped segment for organized retail. The major forms of organized retailing available in India are: Source: Sinha Piyush Kumar and Uniyal Dwarika.RETAIL INDUSTRY GROUP 4 .MARKETING B markets.3 Structure of Indian Retail Sector ALLIANCE BUSINESS SCHOOL 2009-2011 Page 20 PGP . But it is still largely confined to the metropolitan cities. Angel Research 1. The concept of organized retail is new to India and is slowly catching on. Retail Management . The plethora of brands on display at these malls and hypermarkets attracts today’s brand conscious customer. 2005. People still prefer the age old kirana stores located next to their house rather than the huge malls or supermarkets which offer all products under one roof.
3. 14. hand cart. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 21 PGP . Unorganized sector constitutes of the local kiranas. Huge opportunity exists. High degree of professionalism and corporate ethics. Introduction of Value Added Tax or VAT and tax reforms. World bank states.4 Key Points of Indian Organised Retail Industry 1. Excellent Investment opportunities in Indian retail sector and in allied sectors. 12. To invest US $130 billion for the development of infrastructure. Potential to be the third largest economy in terms of GDP in next few years . 9. 11. especially in semi-rural and rural areas. entertainment and food all under one roof. Fastest growing tourist market in Asia.MARKETING B The Indian retail industry can therefore be broadly divided into organized and unorganized retailing. It ranks high amongst the top 10 FDI destinations of the world . multi-storeyed malls and huge complexes offer shopping. Vibrant and multi cultured cities. The organized sector on the other is hand trading undertaken by the licensed retailers who have registered themselves to sales as well as income tax.RETAIL INDUSTRY GROUP 4 . 1. 6. Stable and investor friendly Central Government at the helm of affairs. 8. 4. Hordes of foreign investors are thronging in to invest in Indian retail markets. Bullish stock markets. 10. They constitute of corporate backed hypermarkets and retail chains. the vendors on the pavement etc. 5. sure and high returns on investments. Unorganized retailing is still the backbone of the Indian retail industry contributing to over 95 per cent of total retail revenues. India to be worlds second largest economy after China by the year 2050. This modern retail has entered India as seen in sprawling shopping centres. by year 2010. 13. Highly educated English speaking young workforce. 2. 7.
Having almost 1. 16. Table 1. Evolution of Indian Retail ALLIANCE BUSINESS SCHOOL 2009-2011 Page 22 PGP .RETAIL INDUSTRY GROUP 4 . Organised Retail accounts for around 52% of Total Retail. Russia (33%) and China (20%). durability) 1. Globally.3 Advantages of conventional and Morden organised Retail Formats Advantages of Conventional and Modern Organized Retail Formats Conventional • • • Large bargaining power Proximity to consumers Long operating-hours Strong relations with customers Convenience and hygiene Modern Organized • • • Low operating-cost and overheads Range and variety of goods Long operating-hours Quality assurance (brand related. 20. Among the BRIC countries only in India the share of organized retail is low. durability) Quality assurance (brand related. across the length and breadth of the country. for the huge semi-skilled Indian population. Brazil (36%). It is seen that the organized sector in India still has a long way to go because the unorganized retail still continues to dominate the retail market. 17. which only around 5% of total retail market.MARKETING B 15.5 Evolution in Organized Retail The Organized Retail Industry in India is estimated to be around US $25.4bn at the end of CY2008. The share of organized retail in other BRIC countries is. Till date the second largest employer after agriculture sector.000 shops. Offers highest shop density in the whole world.
The organized Share of retail sector is expected to increase to 8-9 percent in 201011 as compared to 4 percent in 2007. The food and grocery constitutes the highest retail volume and this share has shown a tremendous growth over the years.RETAIL INDUSTRY GROUP 4 .310 crores and is expected to compound at 27 percent per annum. that is around Rs 67. Kamal Nath.8 Evolution of Indian Retail But the organized retailing is growing at a fast pace.MARKETING B Figure 1.75.‖ In the present the Indian retail sector provides employment to 8 per cent of the nation's workforce which is expected to augment in the future.However due to urban rural divide the growth is likely to concentrate more on metros and large cities.103 crores (7. The organized retail market is presently ~5 percent of the total retail. India‘s minister for Commerce & Industry was quoted as saying ―The India Retail Report 2009 is a well researched and professionally presented document that brings forth several opportunities that could benefit the Indian consumers. I look forward to the Indian retail sector continuing on its developmental growth path and spreading its benefit to all.44 percent of the total retail) in 2010-11. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 23 PGP . This is the largest vertical of 74. aggregating to Rs 1.4 percent of retail size that compromises of fruits and vegetables.
This owes to the increasing disposable incomes and change in the lifestyle. According to NSSO 60th round. Clothing and textile is a large organised vertical and is dominated by big retailers like Pantaloon. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 24 PGP .9 Penetration of Retail sector The second largest share is commanded by the apparels. cereals and other eatables. Koutons. 54 percent of the rural and 42 percent of urban expenditure was on food. staples.RETAIL INDUSTRY GROUP 4 .MARKETING B milk and milk products. The organized retail is attracting and will continue to attract the entry of new players both domestic and foreign as can be observed by the variety of domestic and international brands available in stores. Penetration of Organized Retail Figure 1. Pyramyd.
inflexible labor laws. This is how global players are entering India.RETAIL INDUSTRY GROUP 4 . However domestic companies like Reliance Industries. like Wal-Mart entering India in join hands with Bharati Enterprises.MARKETING B 1. complicated property codes.10 FDI In Retail allowed ALLIANCE BUSINESS SCHOOL 2009-2011 Page 25 PGP . are confident that even if foreign players enter the Indian market the domestic retail players will continue to have a competitive advantage over them. New entrants to the organized retail sector will also face higher labor and property costs than traditional firms and must bear the additional expense of back-up power supplies. multiple licensing requirements and a shortage of skilled managerial staff. Figure 1. spencers. For the security of domestic retailers there was a ban on foreign investment in multi brand retailing that kept big foreign players like Wal Mart and Carrefour from entering India. food bazaar that are taking away their market share. The small retailers feel that they cannot fight the big retailers like reliance fresh. Competitive advantage will be achieved due to low labor and property costs. But now FDI of 51% is permitted in India though only through single branded retail outlets and not through multi brand outlets. Again they can only enter the market through franchisees. Other barriers will include expensive and often inadequate supply-chain infrastructure.6 Role of Foreign Direct Investments There have been huge controversies regarding the organized retail taking over the unorganized sector and the following adverse impact on the lives of various local retailers.
Investment in technology Cold storage chains solve the perennial problem of wastage Greater investment in the food processing sector technology Better operations in production cycle and distribution 2.2 Current FDI Metro Group of Germany Cash-and-carry wholesale trading Proposal faced strong opposition Entities established prior to 1997 Allowed to continue with their existing foreign equity components. No FDI restrictions in the retail sector pre-1997 Food world 51:49 JV between RPG and Dairy Farm International.3 Benefits of FDI 1. Better lifestyle ALLIANCE BUSINESS SCHOOL 2009-2011 Page 26 PGP .6. Leading food retailer in India now Mc Donald’s 1. 1. except in: provided by the foreign collaborator).RETAIL INDUSTRY GROUP 4 .1 FDI in Retail not permitted Private labels. Hi-Tech items / items requiring specialized after sales service. Medical and diagnostic items.6.6. For 2 year test marketing (simultaneous commencement of investment in manufacturing facility required).MARKETING B 1. Items sourced from the Indian small sector (manufactured with technology FDI not permitted in retail trade sector.
Manpower and skill development Through retail training and Greater managerial talent inflow from other countries 4. Long term benefits Up-gradation of agriculture Development of efficient small and medium size industries ALLIANCE BUSINESS SCHOOL 2009-2011 Page 27 PGP .MARKETING B Greater level of wages paid by international players usually More product variety Newer product categories Economies of scale to help lower consumer price Increased purchasing capacity of consumers 3.RETAIL INDUSTRY GROUP 4 . Investment in whole supply chain Improved product basket from India for exports 6. Tourism Development A strong retailing sector boosts tourism as seen from the experience of Singapore and Dubai 5.
To know the pricing strategy.MARKETING B CHAPTER -2 OBJECTIVE 2 OBJECTIVES • • To know the future prospects of retailing in India.RETAIL INDUSTRY GROUP 4 . PGP ALLIANCE BUSINESS SCHOOL 2009-2011 Page 28 .
ALLIANCE BUSINESS SCHOOL 2009-2011 Page 29 PGP . To know the Challenges of the industry.RETAIL INDUSTRY • • • GROUP 4 . To know the role of FDI.MARKETING B To know the characteristics of market leader in terms of sales and profit.
3.1 Segment wise The Indian economy is growing rapidly. the food & grocery segment constitutes the major chunk. Jewellery. Malls are becoming a major attraction centre or hang-out spot in the metro ALLIANCE BUSINESS SCHOOL 2009-2011 Page 30 PGP . However in case of organised retail. Food & Grocery.MARKETING B CHAPTER-3 INDUSTRY ANALYSIS 3 Industry Analysis Retail Industry one of the top most growing industry.e. the apparel & footwear segment stands as the major contributor. the Indian retail though largely dominated by the unorganised retailers has witnessed a massive transition in the last decade. A major contribution is made by the rising number of shopping malls. Furniture & Furnishing. With varied segments of retailing i. Of the total retail sales. Clothing & Footwear. Beverages etc.RETAIL INDUSTRY GROUP 4 .
Kolam for daily use. This means that the unorganized retail would suffer a severe setback due to obsolete technology. talked about and how it wins consumers’ heart and mind influences its sales. An analysis conducted by the McKinsey Global Institute revealed that the retail sector . As a result. inadequate marketing.The segment-wise analysis of the Organized Indian Retail ALLIANCE BUSINESS SCHOOL 2009-2011 Page 31 PGP .RETAIL INDUSTRY GROUP 4 . as a superior quality rice (Basmati) is now available at almost the same price as the normal rice at a local kirana. Thus we can see that the way a product is displayed. Indian consumers would normally consume the rice sold at the nearby kiranas viz. it has been noticed that the sale of Basmati rice has gone up by four times than it was a few years back. For example. grocers and tobacconist shops. If the consumption continues to grow this way it can be said that the local market would go through a metamorphoses of a change. Modern retailing has helped companies to increase consumption and thus demand for their products in the market. They continue to co-exist with the modern formats. etc. etc.).MARKETING B cities. But all this does not make us forget or ignore the traditional formats of retailing (hawkers. poor supply chain. the local stores would soon become things of the past or restricted to last minute unplanned buying. With the introduction of organized retail.
As mentioned earlier most of the food sold is the contribution of kirana stores.000 Cr. 40. with 48% of income being spent on food and beverages. roadside push cart sellers. 900.000 Cr. etc. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 32 PGP . the share of an Indian household's spending on food is one of the highest in the world. 330. Total urban consumption is less than 50% with Rs. Overall food consumption is close to Rs.RETAIL INDUSTRY GROUP 4 .000 Cr while almost 50% is contributes by the major players. According to McKinsey report.1 Food and grocery retail: This is the dormant segment of the retail industry in India.11 Segment wise contribution in Retail Sector 3. This means that aggregate revenues of large food players is currently only 5% of the total Indian market.MARKETING B Figure 3. and around 15-20% of total urban food consumption. But this adds up to only Rs. But mostly the food business is unorganized. vendors.1.
12 Major players of Food and Grocery segment 3. This can be attributed to the fact that the Indian retail market has teamed up with international brands. Figure 3. 300 crore in the next three years. The past few years has seen the sector aligning itself with global trends with retailing companies like Shoppers' stop and Crossroads trying to attract the middle class who constitute the majority of Indian population.MARKETING B Figure 3.13 Major players of Apparels segment ALLIANCE BUSINESS SCHOOL 2009-2011 Page 33 PGP . The ready-mades and western outfits are growing at 40-45% annually.2 Apparel retail: The apparel industry also makes a major contribution to retail industry. However. it is estimated that this segment would grow to Rs. As a result of new entrants entering this segment an Rs.RETAIL INDUSTRY GROUP 4 .1.500 crore market has been created for the premium grooming segment.
The gems and jewellery market is one of the key emerging area. apparel etc)".T. It accounts for a high proportion of retail expenditure by people. 98.3 Gems and Jewellery retail: Indians have an ever increasing desire for Gems and Jewellery even if prices increase multifold. and the recently launched CRS Health from SAK Industries are examples of corporate entering into the pharma sector. The pharma retailing is estimated at about Rs. A few like Dr Morepen. 65. Pharma is believed to become organized and corporatized very soon.RETAIL INDUSTRY GROUP 4 . first with Lifespring and Tang. "Pharma retailing will follow the trend of becoming more organised and corporatised as is seen in other retailing formats (food. This gold is obtained by imports and also by recycling gold within the country.000 crore.MARKETING B 3.1. The market for jewellery is estimated as upwards of Rs. In the south. with 15% of the 51 lakh retail stores in India being chemists. A. 30.4 from Global Healthline Pvt Ltd. Principal. though it is not a pure play pharma retailer but more in the health and beauty care business. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 34 PGP . According to Vikas Bali. India is the largest consumer of gold in the world with an estimated annual consumption of 1000 tonnes.14 Major players of Gems and Jewellery segment .4 Pharma retail: Pharma is one of the few industry which has remained unaffected by the recent global meltdown. Apollo pharmacies.1.000 crores Figure 3. 3. It is one of the very strong and stable segments and is always fed by innovation. Kearney (India) Ltd. RPG group's Health & Glow is already in this category.
150 crore. which is majorly remains to be consumer’s first choice. The book industry is estimated at over Rs.16 Major players of Books and Music segment ALLIANCE BUSINESS SCHOOL 2009-2011 Page 35 PGP .15 Major players of Pharma segment 3. Here again the total sales generated by the organized retail is very low or only 7% (at Rs. Thus this sector is expected to grow by 15% annually. The total size of the Indian music industry is estimated to be Rs.5 Music and Book Retail: There has been a maddening. and ever increasing demand for different genres of music and books.000 crore.210 crore)of the total. equivalent to Rs. The gifting habit in India is making rapid strides as many have made book reading their hobby.1100 crore of which about 36 percent is consumed by the pirated market and organized music retailing constitutes about 14 percent.1.RETAIL INDUSTRY GROUP 4 . This segment is seen to be emerging with text and curriculum books accounting to about 50% of the total sales. As we can clearly see the growth of the organized music segment is affected by the unorganized sector. But here again there is a clash between the organized and the unorganized sector.MARKETING B Figure 3. Figure 3. 3.
Ltd. Bombay Swadeshi Stores Ltd.RETAIL INDUSTRY GROUP 4 .MARKETING B 3.17 Major players of consumer durables segment 3. VCD players and others. The existing size of this sector stands at an estimated USD 4.2 List of Retail Companies in India: Aditya Birla Retail Ltd. Ebony Retail Holdings Ltd.5 Billion with organized retailing being at 5%. Globus Corporation Ltd GR Thanga Maligai Guardian Lifecare Ltd. Bata India Ltd. air conditioners (A/Cs).Arvind Ltd . Consumer electronics comprise of TV sets. Balaji Distilleries Ltd. Bannari Amman Sugars Ltd. Bharat Petroleum Corporation Ltd. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 36 PGP . Figure 3.6 Consumer durables retail: The consumer durables market can be divided into (1) consumer electronics and (2) appliances. microwave ovens. And appliances comprise of washing machines. Brandhouse Retails Ltd Crossword Bookstores Limited Damas Goldfields Jewellery Pvt. Fabindia Garden Silk Mills Limited Gini Silk Mills Ltd Givo Ltd.1. audio systems.
MARKETING B Levi Strauss & CompanyLifestyle Manipal Cure and Care Pvt Ltd. (The Chennai Silks) Titan Industries Ltd. GROUP 4 . McDonald's India Nalli NEXT Retail India Ltd. ITC Ltd – LRBD K. Nirula's Piramyd Retail Ltd. Trent Ltd. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 37 PGP .RETAIL INDUSTRY Heritage Foods (India) Ltd. Raheja Corp. Ltd. WITCO (India) Ltd. RayBan Sun Optics India Ltd Raymond Ltd Reliance Fresh Reliance Petroleum Ltd. Unilever India Exports Ltd. Provogue (India) Ltd. Shopper'S Stop Ltd Siyaram Silk Mills Ltd Spencer's RetailStore One Retail India Ltd Subhiksha TCS Textile Pvt. Reliance World Sankalp Retail Value Stores Pvt. Ltd. Vishal Retail Ltd Vivek Ltd. Wadhawan Food Retail Pvt Ltd. Kalanjali Arts and Crafts Kirtilal Kalidas & Co Koutons Retail India Ltd.
apparel. Spencer’s is one of the popular destination for shoppers in India with supermarkets. which has malls all over India.. It has multiple formats for retailing food. a hypermarket chain and Food Bazaar. and operates multiple retail formats in both the value and lifestyle segment of the Indian consumer market. Top 10 and Star and Sitara. is a large Indian retailer. 1. that offers a wide selection of reading options. Big Bazaar. Shoe Factory. It is a subsidiary of Pantaloon Retail India Ltd's. With effect Jan.MARKETING B Pantaloon Retail (India) Limited.000 people. Established in 1996. Slambay. music and books. Ltd GROUP 4 . a comprehensive selection of toys and the entire gamut of art and stationery related merchandise for home school and office use. Spencer's Retail is one of India’s fastest growing retail stores based in Mumbai. Headquartered in Mumbai. it was the country's largest listed retailer by market capitalization and revenue. It is owned by Pantaloon Retail that also owns the Indian Big Bazaar supermarket chain.000 stores across 71 cities in India and employs over 30. and follows the business model of United States-based Wal-Mart. Future Group. electronics. It is owned by the RPG Group. a new vertical of Spencers Retail. fashion. which includes the Big Bazaar hypermarket and the Food Bazaar supermarket businesses. music releases and children’s activities that ensure that customers have a complete shopping experience. so that the company may be listed independently. a supermarket chain. the company separated its discount store business. Some of the company's other regional brands include. the company has over 1. and as of 2010. The company’s brands include Pantaloons. Brand Factory. Books & Beyond. Blue Sky. which is part of the Future Group. aLL. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 38 PGP . Central is a shopping mall brand. lifestyle products. its wholly-owned subsidiary. with more than 100 stores in operation. Depot. hypermarkets and dailies spread all over India. vibrant and engaging store environment with consumer activation events like author appearances. Baskin Robbins among many others and has three main restaurants like Bombay Blues and Copper Chimney. into Future Value Retail Ltd. a major business house. is positioned as a “community engaging store”. 2010. Books & Beyond offers an internationally designed. It has a food chain with 3 Amigos. a chain of fashion outlets. Big Bazaar is a chain of hypermarkets in India.RETAIL INDUSTRY Zodiac Clothing Co.
the Lifestyle woman is spoilt for choice. Hyderabad. kid’s wear. Mumbai Shoppers Stop Ltd has been awarded "the Hall of Fame" and won "the Emerging Market Retailer of the Year Award". Nagpur. Kolkata. household accessories. make-up. started in the year 1991 with its first store in Andheri. beverages. Delhi. Kolkata. Pune. Jaipur. Lucknow. Star bazaar also includes a large range of fashionable in-house garments for men. From an exquisite variety of home décor. Crossword Bookstores is a chain of bookstores in India based in Mumbai. lingerie. Shoppers Stop is listed on the BSE. Nashik. health and beauty products. by World Retail Congress at Barcelona. Trent Ltd. 2008. footwear. Indore. Surat. she is sure to indulge herself in a world which truly reflects her femininity and understands exactly "What a woman wants" Westside is one of India’s largest and fastest growing chains of retail stores. The company hopes to expand rapidly with similar format stores that offer a fine balance between style and price retailing Star bazaar provides an ample assortment of products made available at the lowest prices. So when a woman visits Lifestyle.000 . Chennai. women’s wear. dairy products. mumbai and bengaluru. established in 1988 as a part of the Tata Group. Delhi. operates Westside. Vadodara. Gurgaon. perfumes and handbags.000 square feet each) in Ahmedabad. cosmetics. Rajkot. Jaipur. This store offers customers an eclectic array of products that include staple foods. Crossword has stores in Mumbai. Ludhiana. Crossword is fully owned by Shoppers Stop. Chennai. Lifestyle is a well-defined retail concept that imbibes the essence of a woman. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 39 PGP . Hyderabad. exclusively available at the store. vegetables. Ghaziabad & Noida (to be considered as 1 city).30.MARKETING B Shoppers Stop is an Indian department stores promoted by the K Raheja Corp Group (Chandru L Raheja Group). Nagpur. Nashik. women and children. Mysore.RETAIL INDUSTRY GROUP 4 . fashion bags. Bengaluru. Bengaluru. spa products and teen gifts. consumer electronics and household items at the most affordable prices. home furnishing & bath decor to home fragrance. These include menswear. aptly exemplifying its ‘helping you spend less’ motto. on April 10. Pune and Ahmedabad. Vadodara and Jammu. With the launch of the Navi Mumbai departmental store. fashion accessories. and gifts. At present star bazaar has 4 stores in 3 cities located in ahmedabad. fruits. Mumbai. perfumes. It offers a wide range of exclusive products that celebrate the free spirit of today’s woman. The company has already established 41 Westside departmental stores (measuring 15. Navi Mumbai. The Westside stores have numerous departments to meet the varied shopping needs of customers. Shoppers Stop has 27 stores in 12 cities in India.
What separates landmark from other stores of its kind is the range and depth of its stock. Landmark also sparked the trend of stocking curios. Its outlets cater to almost all price ranges. Of Stores 13 450 12 400 225 N/A 20 33 N/A 8 19 1 4 Total Retail Space ('000 Sq.000 sq. and can be catered to less than one roof. To 45.4 TOP Major Players in retail in India with respect to No.000 products range which fulfills all your household needs. lucknow. vadodara. 146 sq. 90. Vishal is one of fastest growing retailing groups in India. bengaluru. pune. It was later that music was added to it. toys and other gift items. Department Store Book & Music stores Home Furnishing Landmark Trent India Ltd Department Store Department Store Hyper markets Books & music stores ALLIANCE BUSINESS SCHOOL 2009-2011 Page 40 . 7 hotel bookstores and 4 airport stores. stationery. Each store gives you international quality goods and prices hard to match.RETAIL INDUSTRY GROUP 4 .ft) 1. mumbai. ft. It is covering about 29. and greeting cards. Ft.000 sq. Ft in chennai. gurgaon. landmark’s product portfolio comprised books. in 24 states across India. The cost benefits that is derived from the large central purchase of goods and services is passed on to the consumer TOP MAJOR RETAIL PLAYERS Table 3. of stores. varying in size from 12. gurgaon. Until 1996. ahmedabad and hyderabad.948 5000 1200 6000 230 1000 N/A N/A N/A 370 350 N/A N/A PGP RPG Retail Hyper markets Music stores Book stores Shopper's Stop Ltd. The showrooms have over 70.MARKETING B Land mark: At present landmark have 12 big stores . Formats and Brand names Retailer Pantaloon Retail India Existing Formats Department Store Hyper markets Seamless Malls Brand Names Pantaloon Big Bazaar Central Spencer's Music world Books & beyond Shopper's stop Crosswords Home stop Lifestyle West side Star India Bazaar Land Mark NO.
RETAIL INDUSTRY Vishal Group GROUP 4 .MARKETING B Hyper markets Vishal Mega Mart 183 13.03% amount of shares in organised retail sector.2% and others with 1. Brand house by 5.18 Market share of major players in Indian retail industry From the graph we can say that Pantaloon holds the Maximum amount of share with 60. 3.4 Porter's Five Forces Analysis Threat of New Entrants Threat of Substitutes Bargaining Power of Suppliers LOW Bargaining Power of Consumers MODERATE Competitive Rivalries HIGH HIGH HIGH ALLIANCE BUSINESS SCHOOL 2009-2011 Page 41 PGP . Provogue with 3. Vishal by 12. Trent with 4. Figure 3.45 3.6% Share.3 Market share: Market share: The market share of the industry is calculated by Sales of the players in the industry divided by total sales of the retail industry.69% as a market leader.05%. followed by Shopper’s stop with 12.68%.75%.
RETAIL INDUSTRY GROUP 4 . Even though the growth has not been by leaps and bounds. This trend started over a decade ago ALLIANCE BUSINESS SCHOOL 2009-2011 Page 42 PGP . it still has been significant enough to affect the unorganized retailers. Threat of New Entrants. The retail industry has seen the growth of its organized sector in the recent years.MARKETING B 1.
This can be attributed to the fact that in the retail industry. price. The slow market growth for the retail market means that firms must fight each other for market share. It is not monopoly market. Power of Buyers. inventory control. when Sears were dominating the household appliance market. In this way retailers have tried to exploit relationships with the suppliers. While the barriers to start up a store are not impossible to overcome. Retailers always face stiff competition. Individually. A contract with a large retailer such as Wal-Mart can make or break a small supplier 3. Suppliers that didn’t meet these standards were dropped from the Sears line. If we walk through any mall we can notice that majority of them are chain stores and there exist a just a hand full of standalone stores. 4. the ability to establish favourable supply contracts. Prices offered by the mall-stores are usually not negotiable. Retailers offering products that are unique have a distinct or absolute advantage over their competitors. There is no scarcity as such in the retail sector. they set high standards for quality. Availability of Substitutes. Power of Suppliers. Their vertical structure and centralized buying gives chain stores a competitive advantage over independent retailers.RETAIL INDUSTRY GROUP 4 . We can also take the example of Wal-Mart which places strict control on its suppliers. They come with a tag attached saying ‘fixed price’.MARKETING B and has been a decreasing number of independent retailers. This means that what one store offers you will likely find at another store. leases and be competitive is becoming virtually impossible. 2. it helps keep retailers honest. Competitive Rivalry. suppliers tend to have very little power. In the 1970s. There is no market without competition and there are no better ways than existence of competing forces in the market to improve upon quality. This warns a customer from even entering the store if he wants discounted prices. but to deal in a wide range of products and services. if customers demand high-quality products at bargain prices. customers have very little bargaining power with retail stores. etc. More ALLIANCE BUSINESS SCHOOL 2009-2011 Page 43 PGP . supply chain management. But as a whole. The tendency in retail is not to specialize in one good or service. Therefore innovation and product differentiation are the indispensible ingredients needed to stand alone in the retailing industry. It is very difficult to bargain with the clerk at Safeway for a better price on grapes. 5.
tariffs. is likely to grow at a much faster pace of 45-50% per annum and quadruple its share in total retail trade to 16% by 2011-12. Musicworld) Crossword Wills Lifestyle Globus Piramals ( Pyramid & Crosswords) Ebony Retail Holdings Ltd 3. labour law.5 PEST Analysis: PEST analysis is concerned with the environmental influences on a business. environmental law. memberships and other special services to try and gain the customer's loyalty.The major market players in the Indian context i. emphasis on safety. Economic factors include economic growth. tax policy.RETAIL INDUSTRY GROUP 4 . Social factors include the demographic and cultural aspects of the external macro environment. These factors have major impacts on how businesses operate and make decisions. Given the relatively weak financial state of unorganised retailers and the physical space constraints on their expansion prospects this sector alone will not be able to meet the growing demand for retail. career attitudes. automation. Some social factors include: health consciousness. technology incentives. social. reduce minimum efficient production levels. Economical. and influence outsourcing decisions. rate of technological change. Acronym for this is Political. Some technological factors include: R&D activity.MARKETING B recently. population growth rate. they have tried to reduce the cutthroat pricing competition by offering frequent flier points. technological. trade restrictions. Political factor like government policies. interest rates. Technological factors can lower barriers to entry. which now constitutes a small 4% of total retail sector. exchange rates and the inflation rate. age distribution. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 44 PGP . Hence organised retail.e • • • • • • • • • • • Shoppers' Stop Vishal Mart Westside (Trent) Pantaloon (Big Bazaar) Lifestyle RPG Retail (Foodworld. and political stability. These factors affect customer needs and the size of potential markets.
People live in different parts of the country may have different cultural values . The first is to protect from each others. exercise equipment and so on will want to cater to this trend with appropriate products and communication appeals. professional groups and others who impose restrictions on marketing process and its impact may be felt by retailers in doing their business. deceive through their packages and bait through their prices. MARG etc. So laws are passed to prevent unfair competition. Some firms. would adulterate their products. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 45 PGP . if left alone. government agencies and pressure groups that influence and constrain various organisations and individuals in society. The retail marketing executive needs a good working knowledge of the major laws protecting competition consumers and the larger interests of society. tell 41lies in their advertising. The society that people grow up in shapes their basic beliefs. The second purpose of Government regulation is to protect consumers from unfair retail practices. Legislation affecting retail business has steadily increased over the years. Unfair consumer practices have been defined and are enforced by various agencies. values and norms. SOCIAL/ CULTURAL ENVIRONMENT In recent years. offer social / cultural forecasts in this connection. This will help them to reorient their strategy to fulfill the demands of their consumers. The implication of socially responsible marketing is that retail firms should take the lead in eliminating socially harmful products such as cigarettes and other harmful drugs etc.MARKETING B POLITICAL / LEGAL ENVIRONMENT Retail marketing decisions are substantially impacted by developments in the political / legal environment.RETAIL INDUSTRY GROUP 4 .which has to be analysed by retail business people/firm. the concept of social responsibility has entered into the marketing literature as an alternative to the marketing concept. mass media. marketers of foods. The third purpose of Government Regulation is to protect the larger interest of society against unbridled business behaviour. social workers. This environment is composed of laws. The legislation has a number of purposes. Several firms such as ORG. For example. There are innumerable pressure groups such as consumer activists. Retail marketers have a keen interest in anticipating cultural shifts in order to spot new marketing opportunities and threats.
they have used balances which could not measure the merchandise correctly. rising costs and up and down business cycles.With the help of weighing machine. Conversely. Earlier. Total purchasing power is a function of current income. Further.RETAIL INDUSTRY GROUP 4 . products can be measured with the result customer satisfaction can be enhanced. economic swings affect marketing activity. These changes in economic conditions provide marketers with new challenges and threats.which will affect the output price and consequently affect the sales. In any event. In the following areas where technology have been extensively used. The effect on consumers also influences the marketing through changes in consumer habits. Marketers should be cognizant of major trends in the economic environment. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 46 PGP . TECHNOLOGICAL ENVIRONMENT The most dramatic force shaping people's lives is technology. adoption of new technology often is prevented by constraints imposed by internal and external resources. At the same time. Technology has helped retailers to measure the products with modern weighing machines. because they affect purchasing power. Advances in technology are an important factor which affect detail marketers in two ways. savings and credit availability. they are totally unpredictable and secondly. For example. Economic forecasters looking ahead through the next decade are likely to find their predictions clouded by the recurrent themes of shortages. This is an indirect influence. whether it is a free economy or controlled economy. both directly and through the medium of market place. prices.MARKETING B ECONOMIC ENVIRONMENT Retail markets consist of purchasing power as well as people. Retail marketing firms are susceptible to economic conditions. it should be remembered that technological progress creates new avenues of opportunity and also poses threat for individual firms. consumers often curtail or postpone their expenditures. First. during time of fall in prices. The changes in economic conditions can have destructive impacts on business plans of a firm. How effectively these challenges could be converted into opportunities depend on well-thought-out marketing programmes and strategies. the cost of all inputs positively respond to upward swing of economic condition . no economy is free from the tendency of variation between boom and depression. in the event of increase in prices. consumers are much less conscious of small price differences and would buy luxury and shopping products. For example.
6 SWOT ANALYSIS SWOT analysis of the organized Indian Retail Industry STRENGTHS 1. Modern refrigerators where merchandise can be used for a long time and 4. Billing. 3. to lessen inventory holding. to maintain Just-In-Time arrivals of goods and through all this ultimately reduce costs and maintain competitiveness. to reduce the lead times. For this purpose organized retailers have incorporated MIS in all their areas of operations. etc. They need to work closely with research and development people to encourage more consumer oriented research. Example: Wal-Mart pioneered the concept of building competitive advantage through distribution & information systems in the retailing industry.MARKETING B 2.supermarkets. Overall consumer spending has increased with the entry of the organised ALLIANCE BUSINESS SCHOOL 2009-2011 Page 47 PGP . 2. They introduced two innovative logistics techniques – cross-docking and EDI (electronic data interchange). and product types. But in the long run. Technological change faces opposition from one group of people-telling that it may lead to retrenchment of employees. The retail marketers must be alert to the negative aspects of any innovation that might harm the users and create consumer distrust and opposition. Technology: The organized Indian retail is driven by up-do-date technological innovations. The successful organized retailers work hand-inhand with the various vendors in order to know the current market demand for products. Savings for consumers: Consumers have definitely gained from organised retail on multiple counts. stock on an average 5000 SKU’s as against few hundreds of stock stored by the average unorganized retailer 3. Printing the name of the shop on the product visibly 3.RETAIL INDUSTRY 1. This gives them an edge over the unorganized retailers since generally retailing itself is a ‘technology-intensive’ industry. this argument may not sustain. Packing of the products GROUP 4 . departmental stores. Sufficient stock: The Organized retailers. retail marketers need to understand the changing technological environment and how new technologies can serve human needs.
when demanded. Thus we can see that despite high footfalls. While all income groups saved through organised retail purchases. it will be possible to get an application cleared within seven days and those already having an existing store in ALLIANCE BUSINESS SCHOOL 2009-2011 Page 48 PGP . organised retail is relatively more beneficial to the less well-off consumers 4. 2. Poor warehousing facilities and storage: The Organized retailers also suffer from lack of proper warehouse and storage facilities in case of stocking up inventories.RETAIL INDUSTRY GROUP 4 . Thus. This in turn affects their sales of goods when demand fluctuates suddenly especially if the sales are seasonal in nature. The organized retail is a new term in India. It is the stand-alone stores that have been near and dear to the Indian customers for a very long time. Employment: Organized retailing brings many advantages to producers and also to urban consumers. WEAKNESSES 1. Customer Loyalty: Retail chains are yet to come out with proper merchandise mix for their mall outlets. Single window clearance: Recently ‘Single window clearance’ was demanded recently by Retailer Association of India(RAI) in order to reduce the number of licenses needed for setting up a retail outlet chain. the conversion ratio has been very low in the retail outlets in a mall as compared to the standalone counter parts 3. This results in uncertainty in the amount of stocks purchased by the retailers for fear of poor maintenance. Under the single window clearance system. would mean loss of firms’ sales to competitors.MARKETING B retail. while also providing employment of a higher quality. OPPORTUNITIES 1. Therefore they already stand stabilized in terms of footfalls & merchandise mix and thus have a higher customer loyalty base. Less Conversion level: It can be seen that the actual conversions of footfall of sales for a mall outlet is approximately 20-25% as against the high street store of retail chain which has an average conversion of about 50-60%. As a result the ROI (return on investment) of a stand-alone store is 25-30% but that of the retail majors is only 8-10%. Failure to supply products to customers. the survey revealed that lower income consumers saved more.
This will help retailers to set up retail outlets without much hassles.RETAIL INDUSTRY GROUP 4 . It is estimated to grow at the rate of 25-30% p. Pepsi on the other hand is experimenting with the farmers of Punjab for growing the right quality of tomato for its tomato purees & pastes. Growing middle class population: The Indian middle class is expected to double by 2010 and is projected to grow to over 60 Cr and thus making India one of the largest consumer markets of the world. attempting to provide farmers a one-stop destination for all their needs. Rural Retailing: India has a huge rural population which is still out of reach by the organized retailers. the focus now shifts towards the tier-II cities. Untapped cities: It has been found that the top 6 cities contribute for almost 66% of the total organized retailing. 2.00. The contribution of these tier-II cities to total organized retailing sales is expected to grow to 20-25%. Many studies reveal that India will have over 55 Cr people under the age of 20 .a. The Godrej group has launched the concept of 'agri-stores' named "Adhaar" which offers agricultural products such as fertilizers & animal feed along with the required knowledge for effective use of the same to the farmers.000 Cr by 2010. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 49 PGP . 3.reflecting the enormous opportunities possible in the kids and teens retailing segment. Now with the metros being already been tapped. 4. has to percolate down to these smaller cities and towns because out of the total organized penetration 85% has been restricted only to the metros. and reach INR 1. 3. Organized retail is only 3% of the total retailing market in India. The 'retail boom'. This segment shows huge potential if tapped in the right way. For Example: ITC launched India's first rural mall "Chaupal Saga" offering a diverse range of products from FMCG to electronic goods to automobiles.MARKETING B the state will be able to get a licence for opening a new one by merely applying and taking an extension.
1 Herfindahl Index "HHI" means the Herfindahl-Hirschman Index. Proximity: Organized retail is not ‘next-door shopkeepers’. Lack of a strong cold chain: The temperature-controlled logistics industry is very poor in keep up its core competency-maintaining proper temperatures. The unorganized retailers put together are equal to a large number of supermarkets with no or little overheads. 3. indicating perfect competition. 4. This in turn affects the quality and safety of the product delivered to the customer. convenient timings. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 50 PGP . prices and turnover. Herfindahl index ranges from a low of 0. 5. Even with improved international standards and intense public scrutiny.7. they also have high degree of merchandise flexibility. Plus malls are usually perceived to sell goods at hiked prices as compared to standalone stores. Underdeveloped supply chain: Indian retailers suffers from poor supply chain management. display. a commonly accepted measure of market concentration. and home delivery. The intermediaries are not timely in their supply of goods especially during peak demand period. and amenability to bargaining. Even now malls are just a place to hang around with family and friends and largely confined to windowshopping. 2.7 Market concentration: 3. It is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. Unorganised retailers have significant competitive strengths that include consumer goodwill. the integrity of the cold chain in not maintained efficiently. Shopping Culture: Shopping culture has not developed in India as yet. to a higher of 10. The supply chain is still not efficient enough to account for reduced lead time or JIT facilities. This leads to heavy costs suffered by the manufacturers as well the retailers.000 indicating the complete monopoly. ability to sell loose items. 3.MARKETING B 1. Not only this. credit sales.RETAIL INDUSTRY THREATS GROUP 4 . Thus proximity is a major comparative advantage of unorganised outlets.
Retail Provogue (India) Shoppers' Stop Trent Vishal Retail Others 60. Industries with concentration ratio between 0% to 50% have Herfindahl index values between 0 and 1000. Market share as follows: Table 3.03% Assumption made that all the above mentioned companies contribute to 100% of the market share in India Organised retail market. This value is only achieved if one firm has a market share of 100 percent.68% 1. Monopolistic competition falls into the bottam of this with oligopoly emerging near upper end. 10.05% 3.032 ALLIANCE BUSINESS SCHOOL 2009-2011 Page 51 PGP .752+4.69% 5. Herfindahl index means perfect competition or at the very least monopolistic competition that are Extremely competitive at the low end. Low concentration: A Herfindahl index of 0 to 1000 is commonly as an industry with low concentration. This level corresponds with Concentration ratios between 80% and 100%.052+3.692+5.RETAIL INDUSTRY GROUP 4 . Total Concentration: At the high end. High concentration: An industry with a Herfindahl index of 1.60% 12. Concentration ratios between 50% and 80%.MARKETING B No concentration: The number of firms is so large that sum of the square of the market share is 0.202+12.800 to 10.800 percent is consider an industry with medium concentration.000 Herfindahl index means Monopoly.62+12.20% 12.000 percent is viewed as highly concentration.5 Market share Pantaloon Retail Brandhouse .75% 4. Market share is calculated by dividing sales of the individual company by Total sales of the all companies. As we have taken sales of the major players in organised sector. Medium Concentration: A Herfindahl index of 1.000 to 1. Now. Calculating of Herfindahl index is as follows: H= 60. These industries are very much oligopoly.682+1.
Even though technology is available to cater to this segment.58 GROUP 4 . is at complete variance with the findings of an experts panel (ICRIER) appointed by the commerce ministry to go into the impact of Big retail on conventional retailers (also referred to as ‘Kiranas’) but it might affect the growth of Retail industry. This could be one of the key reasons why IT usage percentage remains low in the Indian retail industry.RETAIL INDUSTRY H= 4064. It has few significant players like Pantaloon Retail. The most significant challenge that impedes the development of an efficient and modern retail sector is an underdeveloped supply chain.8 Industry Challenges: Ban on Foreign Direct Investment in Retail. Absence of developed supply-chain and IT management. has been ALLIANCE BUSINESS SCHOOL 2009-2011 Page 52 PGP . Moreover. the usage of IT in the back-end supply is fairly low in India.From movement and storage of raw materials.000 percent therefore organised retail sector is highly concentrated. Blanket ban should be imposed on domestic corporate heavyweights and foreign retailers from entering into retail trade in grocery. Shoppers stop limited. An underdeveloped supply chain cannot help retail stores. is lagging behind in IT usage. factors such as money and low understanding of benefits deter its usage.MARKETING B Since the value of the index is between 1800 t0 10.While investment in human resource is essential for running the retail business. and finished goods from points of origin to consumption – the current retail boom in India can only sustain its momentum if supply chain management is given top priority by retail players. although. Regulations restricting Real estate Purchases. ensuring a continuous supply of trained workers is proving to be a big challenge for employers. 3. fruits and vegetables. This. It will cause more harm. inventory.The retail industry. The unorganized sector. Lack of trained workforce. which is growing at a double digit pace.According to a parliamentary standing committee.Government intervention – in the form of regulations. India today has an underdeveloped unidirectional supply chain that increases inventory build-up and operational inefficiencies for companies. infrastructure investments and taxation – has a direct impact on urban land supply and on the demand for land which in turn effects the Retail business. a considerable portion of the retail industry.
There has many times where concerns regarding insufficient manpower in the retail industry have been in the news. This is due the short-sighted view by the parties and should be adjusted to focus on a long term strategy. Human resource crunch.e. The retail industry according to recent reports is growing at a rate of 100 percent. trade of stocks and building of relationships. Along with this if we consider the expedition by mega players like Reliance and BhartiWalmart then the fear can surely turn into a misperception. The increasing emphasis on providing more value-added services is creating the demand for trained people.) the Big Bazaar chain of retail outlet alone provides employment to more than 18. Permitting 51 percent retail FDI in single brand retailing is a greeting move in this direction.000 by June 2008. Retailing mainly deals with hardselling of space. Instead the limiting move will send wrong signals to the investors and will ward off investments when the country needs it most. Nowadays many institutes also provide post-HSC and postgraduate retail-specific courses. The advent of organised retailing in an economy where spending power is growing fast and with the Tier II as well as Tier III town dwellers becoming more and more brand aware and conscious is sure to bring a revolution and new look to the retail sector ALLIANCE BUSINESS SCHOOL 2009-2011 Page 53 PGP . a graduation will be good enough. It does require higher degrees of educational qualifications.MARKETING B facing an acute shortage of trained personnel. But in general this fear is groundless.000 people which would expand to accommodate 34.Retailers also have to consider the political parties interests before opening their outlets. It is also expected that in the near future the government will create further opportunities for the organized retail to come up as home grown investment is always sweeter than foreign investment. It also true that they would reduce the profit share of the unorganized retailers but the organized retail taking business away especially from small food vendors is more easily said than done. Some political parties want the government to amend laws and improve ceilings so that the mega players can't openly destroy the unorganized retail sector. The megastores will provide employment to the less educated masses and also provide savings for the middle class. Government hindrances. Kishore Biyani's Future Group (i.RETAIL INDUSTRY GROUP 4 . Since most of the openings are for front line shop people.
MARKETING B CHAPTER-4 COMPANY PROFILE ALLIANCE BUSINESS SCHOOL 2009-2011 Page 54 PGP .RETAIL INDUSTRY GROUP 4 .
The present chairman of the company is Mr Chandru L Reheja. Today. Shoppers’ Stop has become the highest benchmark for the Indian retail industry. Shopper's Stop is a household name. COMPANY BACKGROUND ALLIANCE BUSINESS SCHOOL 2009-2011 Page 55 PGP .1 million square feet of built-up area. cosmetics and accessories. known for its superior quality products. Retail format vision. with the growing affluent middle class population as their target consumer base. the company’s continuing expansion plans aim to help Shoppers’ Stop meet the challenges of the retail industry in an even better manner than it does today . 4. The group offers formats in the lifestyle and luxury segment. Raheja Group. while the gross margin stood at Rs 4380 million showing a growth of 15%. With an immense amount of expertise and credibility. shoppers stop. here is their detail company profile which covers the aspects like establishment. spanning a spectrum of retailing verticals and formats. Shoppers Stop launched its e-store with delivery across major cities in India in 2008. Trent and Vishal Retail. established in 1991 with its flagship store-Shoppers Stop by the K. and sister stores and many more as follows. In fact. owner.1 SHOPPERS STOP Shoppers Stop. for providing a complete shopping experience. has now expanded to over 100 retail outlets spread across 1.14001 million. So.MARKETING B 4 Company Profile: To study in detail about the Retail industry we are considering the major players in the market such as Pantaloon. services and above all.It was incorporated on 16th june 1997 as a private limited company. including apparel. The website retails all the products available at Shoppers Stop stores. showing at a growth of 16%. In FY’09 company achieved a gross retail turnover of Rs.RETAIL INDUSTRY GROUP 4 .
400064.MARKETING B 1997 CHANDRU. Plot No 17-24.in http://www. Maharashtra E-mail Website Face Value (Rs) BSE Code NSE code Bloomberg ISIN Demat Market Lot Listing Financial Year End Book Closure Month AGM Month Registrar's Name & Address investor@shoppersstop. Registered Office Mindspace Link Rd Malad (West).co.RETAIL INDUSTRY Incorporation Year Chairman Company Secretary Auditor GROUP 4 .shoppersstop. Mumbai.com/ 10 B SHOPERSTOP SHOP IN INE498B01016 1 Mumbai. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 56 PGP .RAHEJA PRASHANT MEHTA Deloitte Haskins & Sells Eureka Towers 9th Floor B Wing. Vittal Rao Nagar. Madhapur. 1 position in the Indian market in the Department Store category. 91-040-23420815/6/7 VISION "To be a global retailer in India and maintain its No. L." VALUES We shall not take what is not ours.NSE 3 Jul Jul Karvy Computershare Pvt Ltd. Hyderabad-500081.
We shall have an environment conducive to development.MARKETING B The Obligation to dissent (against the viewpoint that is not acceptable) We shall have a environment conducive to openness We shall believe in innovation.RETAIL INDUSTRY GROUP 4 . ALLIANCE BUSINESS SCHOOL 2009-2011 Page 57 PGP .A. the company came forward with a product called FIRST CITIZEN. SISTER STORES Crossword bookstores Homestop Brio Desicafe Hypercity M. For getting the benefits of First Citizen.200. We shall respect our customers rights The value of trust. We shall be fair. the customer need to take a membership card by paying Rs.C Arcelia MotherCare Naunce Group Hypercity-Agros Timezone FIRST CITIZEN PROGRAM First Citizen is a loyalty program by Shoppers Stop. We shall have the willingness to apologise and/or forgive. In order to create more loyal customers for shoppers stop.
Reward points can be redeemed for a wide variety of merchandise at company’s stores. Currently the site also offers books from Crossword in addition to Shopper’s Stop merchandise and has a country wide delivery foot print. Home delivery of altered merchandise. the shopping experience of the customers becomes more enjoyable with: Reward points for each shopping at shoppers stop. Updates on what customers can look forward to shop for at shoppers stop. This application has automated all the activities at the DCs in addition to providing an online monitoring system to the central logistics team. This portal will help our customers access our merchandise 24 x 7. First Citizens can earn and redeem all their points online.MARKETING B As a first citizen. Distribution Center Automation System: Your company has deployed a mobility solution at all its Distribution Centers (DC). Exclusive cash counters at shoppers stop so people can spend more time shopping than waiting in a line. Exclusive benefits and privileges. Exclusive offers ever so often. Deployment of this application has resulted in increased availability of merchandise at all our stores Web Security Solution: ALLIANCE BUSINESS SCHOOL 2009-2011 Page 58 PGP . Technology Initiatives: E-Com Portal: Your company launched its online shopping site in July 2008.RETAIL INDUSTRY Product Details GROUP 4 .
Steps towards ‘Green IT’: The Company has managed to lower the carbon footprint at its computing facilities by effectively implementing virtualization technologies and also thru various other measures. Shopper‘s Stop has launched co-branded credit cards with Citibank with a meaningful proportion of sales already on credit cards. These initiatives have resulted in lowering power consumption while ensuring efficiency. it would only increase going forward ALLIANCE BUSINESS SCHOOL 2009-2011 Page 59 PGP . This has helped reduce up to 50% of our physical servers count. Server & Storage Virtualization: The Company is one of the early adopters of Virtualization technologies. we now have an agile provisioning process that has reduced the time to create new IT infrastructure from 4-6 weeks to a few days.MARKETING B The Company has deployed a web security solution to protect its network perimeter against spyware and a wide variety of web-based threats. With the help of Virtualization. Most importantly it has ensured optimal usage of available computing resources and made it easier to address the growing requirements. This solution further strengthens the network security arrangement by helping both securing and controlling web traffic at Shopper’s Stop.RETAIL INDUSTRY GROUP 4 . such as implementing power management features at user computing devices with the help of Microsoft Windows Group Policies. operating in our data centre.
a chain of fashion outlets. Some of its other formats include Brand Factory.2 PANTALOON RETAIL Pantaloon Retail (India) Limited. The company also operates an online portal. a largeformat home solutions store. is India’s leading retailer that operates multiple retail formats in both the value and lifestyle segment of the Indian consumer market. Top 10 and Star and Sitara. aLL. Future Value Retail Limited is a wholly owned subsidiary of Pantaloon Retail (India) Limited. has over 1000 stores across 73 cities in India and employs over 30. a chain of seamless destination malls. covering an operational retail space of over 6 million square feet. a supermarket chain. Headquartered in Mumbai (Bombay).MARKETING B 4. This entity has been created keeping in mind the growth and the current size of the company’s value retail business. selling home furniture products and eZone focussed on catering to the consumer electronics segment. Big Bazaar. operates Home Town. Food Bazaar.futurebazaar. convenience and quality and Central. Future Value Retail Limited will continue to deliver more value to its customers.com. Home Solutions Retail (India) Limited. Pantaloon Retail is the flagship company of Future Group. the company operates over 16 million square feet of retail space. Big Bazaar and Food Bazaar. FUTURE GROUP ALLIANCE BUSINESS SCHOOL 2009-2011 Page 60 PGP . 170 Food Bazaar stores. led by its format divisions. blends the look.RETAIL INDUSTRY GROUP 4 . touch and feel of Indian bazaars with aspects of modern retail like choice. Collection i.000 people. among other formats. Blue Sky. a uniquely Indian hypermarket chain. stakeholders and communities across the country and shape the growth of modern retail in India. The company’s leading formats include Pantaloons. The company operates 120 Big Bazaar stores. in over 70 cities across the country. A subsidiary company. a business group catering to the entire Indian consumption space. supply partners. As a focussed entity driving the growth of the group's value retail business.
sportswear retailer . The group’s speciality retail formats include supermarket chain . among others. electronics retailer .’ The group’s corporate credo is.Food Bazaar. a fashion retail chain and Central. Led by its flagship enterprise. Pantaloon Retail. Headquartered in Mumbai (Bombay). as espoused in the group’s core value of ‘Indianness. its marquee brand. capital. Future Group believes in developing strong insights on Indian consumers and building businesses based on Indian ideas. retail media and logistics. insurance. Kishore Biyani. retail real estate development. Pantaloon Retail employs around 30.Aadhaar. Mumbai. brand development. group subsidiaries are present in consumer finance. Mr. The company follows a multi-format retail strategy that captures almost the entire consumption basket of Indian customers. touch and feel of Indian bazaars with the choice and convenience of modern retail. Maharashtra ALLIANCE BUSINESS SCHOOL 2009-2011 Page 61 PGP . home improvement chain -Home Town and rural retail chain .000 people and is listed on the Indian stock exchanges. leisure and entertainment.Planet Sports. the group operates Pantaloons. Jogeshwari (East).eZone.’ COMPANY BACKGROUND Incorporation Year Chairman Managing Director Company Secretary Auditor Registered Office 1987 Shailesh Haribhakti Kishore Biyani Deepak Tanna NGS & Co Knowledge House Shyam Nagar.MARKETING B Future Group. is one of India’s leading business houses with multiple businesses spanning across the consumption space.RETAIL INDUSTRY GROUP 4 . Big Bazaar is a hypermarket format that combines the look. the group operates over 16 million square feet of retail space in 73 cities and towns and 65 rural locations across India. 400060. In the value segment. ‘Rewrite rules. led by its founder and Group CEO. In the lifestyle segment. a chain of seamless malls. While retail forms the core business activity of Future Group. Retain values.
Bhandup West.NSE 6 Nov/Dec Dec Link Intime India Pvt Ltd. MISSION We share the vision and belief that our customers and stakeholders shall be served only by creating and executing future scenarios in the consumption space leading to economic development. C-13 Pannalal Silk. 91-022-25963838 VISION Future Group shall deliver Everything.com/sanjay.in/ 2 523574 A PANTALOONR PF IN PART. Mumbai . Everywhere. Everytime for Every Indian Consumer in the most profitable manner.rathi@panta http://www.pantaloonretail.MARKETING B investorrelations@pantaloon. Mills Cmpd LBS Road.400 078.RETAIL INDUSTRY E-mail Website Face Value (Rs) BSE Code BSE Group NSE Code Bloomberg Reuters ISIN Demat Market Lot Listing Financial Year End Book Closure Month AGM Month Registrar's Name & Address GROUP 4 . ALLIANCE BUSINESS SCHOOL 2009-2011 Page 62 PGP .BO INE623B01027 1 Mumbai.
conscious and committed to quality in whatever we do. Furniture. sincerity. making consumption affordable for all customer segments – for classes and for masses. 2006 and is involved in the business of creating. creating retail realty.MARKETING B We will be the trendsetters in evolving delivery formats. FMIL offers relevant engagement through its media properties like Visual Spaces. Home Town and e-zone FUTURE BRANDS LIMITED Future Brands Limited (FBL) has been incorporated on November. cost. FUTURE SUPPLY CHAIN SOLUTIONS LIMITED ALLIANCE BUSINESS SCHOOL 2009-2011 Page 63 PGP . The key product categories are Consumer Durable & Electronics (CDE). Electronics Bazaar. developing. acquiring and dealing in consumer-related brands and IPRs (Intellectual Property Rights). Radio.RETAIL INDUSTRY GROUP 4 . We shall ensure that our positive attitude. HSRIL operates retail format Collection-i. Television and Activation. We shall infuse Indian brands with confidence and renewed ambition. aimed at creation of media properties in the ambience of consumption and thus offers active engagement to brands and consumers. Print. Home improvement and Home services. managing. humility and united determination shall be the driving force to make us successful. Home furnishing & decor. AFFILIATE COMPANIES HOME SOLUTIONS RETAIL (INDIA) LIMITED Home Solutions Retail (India) Limited (HSRIL) offers complete retailing solutions for all products and services related to home building and home improvement. Furniture Bazaar. FUTURE MEDIA (INDIA) LIMITED Future Media (India) Limited (FMIL) was incorporated as the Group’s media venture. We shall be efficient.
PFPIL has sourcing and distribution bases at all key cities across the country. FCH subsidiary companies include Kshitij Investment Advisory Company Ltd. FCH is one of the fastest growing financial services company in India. Horizon and Future Hospitality Funds. The company operates a consumer finance retail format. FUTURE GENERALI INDIA INSURANCE COMPANY LIMITED ALLIANCE BUSINESS SCHOOL 2009-2011 Page 64 PGP . The Company would be engaged in sourcing and wholesale distribution of mobile handsets.. FUTURE KNOWLEDGE SERVICE LIMITED Future Knowledge Services Limited (FKSL) was incorporated on January. and Indivision Investment Advisors Ltd..MARKETING B Future Supply Chain Solutions Limited (FSCS) has been incorporated as a separate entity and is involved in the business of providing logistics.RETAIL INDUSTRY GROUP 4 . PANTALOON FOOD PRODUCT (INDIA) LIMITED Pantaloon Food Product (India) Limited (PFPIL) was incorporated with the object of sourcing and backward integration of food business of the Company. UAE. The Company has a 50% stake in Future Axiom Telecom Limited (FATL) which is a joint venture Company with Axiom Telecom LLC. with presence in Asset Advisory. transportation and warehousing services for all group companies and third-parties. Ambit Investment Advisory Company Ltd. Future Money and manages assets worth over US$ 1 Billion through Indivision. FUTURE AXIOMTELECOM LIMITED Future Axiom Telecom Limited is a Joint Venture with Axiom Telecom LLC. accessories and in setting up service centres for mobile handsets in India. 2007 and is engaged in the business of business process outsourcing and knowledge process outsourcing. UAE. Kshitij. Retail Financial Services and Proprietary Research. FUTURE CAPITAL HOLDINGS LIMITED Future Capital Holdings Limited (FCH) was formed to manage the financial services business of Pantaloon Retail (India) Limited and other group entities.
STAPLES FUTURE OFFICE PRODUCTS PRIVATE LIMITED Staples Future Office Products Private Limited (SFOPPL) was incorporated on January.MARKETING B Future Generali India Insurance Company Limited (FGIICL) was incorporated on October 30.com was launched on January 2. 2007. Calcutta) is today a conglomerate encompassing 180 showrooms in 100 cities / 24 states. office equipments and products. SFOPPL is a joint venture between the Company and Staples Asia Investment Limited (a subsidiary of Staples Inc USA). 4. 2007.3 VISHAL RETAIL Vishal Retail Limited is a humble one store enterprise in 1986 in Kolkata (erstwhile. and has emerged as one of the most popular online shopping portals in India. in the shopping category. India’s first hyper-market has also been opened for the Indian consumer by Vishal. Situated in the national capital Delhi this store boasts of the singe largest collection of goods and ALLIANCE BUSINESS SCHOOL 2009-2011 Page 65 PGP . The approval for carrying on General Insurance Business has been received from the Insurance Regulatory and Development Authority of India (IRDA) on September 4. FUTUREBAZAAR INDIA LIMITED Futurebazaar India Limited (FBIL) is set up as the e-Retailing arm of the Future Group for providing on-line shopping experience. 2007. by the PC World Indian Website Awards. The company’s first retail outlet opened in Bangalore in December. Futurebazaar. 2007 and is involved in the business of dealing in all kinds of office supplies. It was awarded with the “Best Indian Website” award.RETAIL INDUSTRY GROUP 4 . 2006 to undertake and carry on the business of general insurance.
It is covering about 29. http://www.12 million for fiscal 2005. BhanduP west. Each store gives you international quality goods and prices hard to match. Vishal is one of fastest growing retailing groups in India.BO INE945H01013 Mumbai. and can be catered to under one roof.vishalmegamart.NSE 3 SEP SEP Link Intime India Pvt Ltd. The Vishal stores offer affordable family fashion at prices to suit every pocket. The showrooms have over 70. NEAR TELCO SER STA.in/vishalipo@vrpl.Ram Chandra Agarwal .NEW DELHI. COMPANY BACKGROUND Incorporation Year Chairman Company Secretary Auditor Registered Office E-mail WEBSITE Face Value (Rs) BSE Code BSE Group NSE Code Bloomberg Reuters ISIN Demat Listing Financial Year End Book Closure Month AGM Month Registrar's Name & Address 2001 Ram Chandra Agarwal Arun Gupta Haribhakti & Co PLOT NO 332. 146 sq. Mills Cmpd LBS Road. 90.The group had a turnover of Rs.110037 investor@vrpl. C-13 Pannalal Silk. Mumbai-400078.RETAIL INDUSTRY GROUP 4 . 022-25946969 The group’s prime focus is on retailing.MARKETING B commodities sold under one roof in India. Its outlets cater to almost all price ranges. 91- ALLIANCE BUSINESS SCHOOL 2009-2011 Page 66 PGP .in. ft. The group’s philosophy is integration and towards this end has initiated backward integration in the field of high fashion by setting up a state of the art manufacturing facility to support its retail endeavours. 1463. in 24 states across India. The cost benefits that is derived from the large central purchase of goods and services is passed on to the consumer.net/ 10 532867 T VISHALRET VISH IN VIRL.BH SHOKEEN FARMLANDS RANGPURI. under the dynamic leadership of Mr.000 products range which fulfils all your household needs.
restaurant & consumer durable as well. These stores would have a size of about 800-2000 sq ft. the company is having three manufacturing facilities. III and IV cities strategically to rech the target customers that prefer value pricing as done by them. The company is in Tier II. with production capacities of 1. Also. The company plans to open nine new formats two categories in apparel. out of which 34 were in Tier-III cities.RETAIL INDUSTRY GROUP 4 . the company established five new companies. 2009. Vishal Retail follows the strategy of value pricing. the company entered into a an agreement with Hindustan Petroleum Corporation Ltd. Strategy employed by Vishal Retail Ltd. the company had 182 stores spread across India. two in Tier-II cities and 16 in a Tier-I city. fashion mart and separate formats for menswear and women's wear. As on March 9. They are intending to open new stores through franchisee model to minimize the companies cost in opening up stores and minimize the risk. they added a fleet of 40 trucks taking the total number of trucks in the fleet to 98. in which Hindustan Petroleum Corporation Ltd will provide space to the company for either Retail store or Warehousing at their mutually selected retail outlets. the company added 52 new stores. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 67 PGP .1 million sq ft of space.5 million pieces each per annum. During the year. Also. they added 9 warehouses with an area of 581. In March 2008. With this. To compete with its competitors.640 sq ft. VRL Movers Ltd. The company also rolls out festive offers like ‗Dhanteras Dhamaal‘ to keep the customers interested and loyal. Also. taking the total number of warehouses to 29 spread across 1. VRL Consumer Goods Ltd. time pricing and discount pricing. VRL Fashions Ltd and VRL Infrastructure Ltd for diversifying the business operations. they set up their manufacturing units at Manesar and Dehradun. The company is also working in the feasibility of launching the convenience model (small formats through franchisee). namely VRL Foods Ltd. The company opened two such stores on a trial basis and had plans to increase.MARKETING B During the year 2007-08.
MARKETING B Vishal promotes heavily through print media and rarely ahs come out with television or other means of advertisement. a books and music chain. Trent runs lifestyle chain Westside. Advertisements as offer brochures and pamphlets along with the local dailies serve them to be in an effective reach for their customers.4 TRENT LIMITED Trent is the retail arm of the Tata Group. a complete family fashion store. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 68 PGP . The company sports an effective website that displays all the products under Vishal‘s roof. PRODUCTS Food Mart Garments Household Home Furnishing Lifestyle Stationery Telemart Travel Accessories 4.RETAIL INDUSTRY GROUP 4 . Established in 1998. Landmark. Vishal Retail is moving into strategic alliances with the local kirana stores turning them into their franchise which would help the kirana stores to compete with the organized sector and observe economies of scale while Vishal would completely take over the kirana stores which would help them expand fast . It is a retail operations company that owns and manages a number of retail chains in India. a hypermarket chain. The headquarters of Trend is in Mumbai. one of India’s largest and fastest growing chain of lifestyle retail stores. Star Bazaar. Sales promotios like ‗shop and fly‘ and ‗ghar basane ke char bahane‘ offers are also effective as far as promotion is considered for Vishal Retail Ltd. and Fashion Yatra.
food and groceries are within the same creative sphere.RETAIL INDUSTRY GROUP 4 .relations@trent-tata. Mumbai-400001. Trent’s expansion has been strongest in the fashion and apparel segment.24 Homi Mody Street. “The acquisitions and expansions have been a part of Trent’s overall strategy — apparel.MARKETING B Trent’s retail model — based on long-term operational sustainability and uncompromising quality — has been different from that of many of the big players. adding to Westside’s offerings. footwear.com http://www. Maharashtra investor. COMPANY BACKGROUND Incorporation Year Chairman Managing Director Company Secretary Auditor Registered Office E-mail WEBSITE Face Value (Rs) BSE Code BSE Group NSE Code 1952 F K Kavarana N N Tata Mehernosh M Surti N M Raiji & Co Bombay House. from the flagship Westside apparel and fashion store. launched in Bangalore in 1998. The hypermarket business. The company has strategically expanded its portfolio. At Trent. with Star Bazaar looking to set up more outlets in urban India.com/ 10 500251 B TRENT PGP ALLIANCE BUSINESS SCHOOL 2009-2011 Page 69 . Landmark’s expansion drive has been in the form of forays into new formats and e-retailing.mywestside. fashion. has been registering steady growth. to acquiring India’s biggest book and music retailer. with the world’s third-largest retailer. Tesco. Landmark. The company has been unhurried. The successful implementation of the strategy has been driven by Trent’s focus on two key factors: customer-centricity and the building of scaleable models.” explains Mr Tata. too. and then associating. and international brand Sisley. in 2008. for its hypermarket brand Star Bazaar. the core belief is that a pragmatic and profit-oriented perspective on expansion is infinitely more preferable to a scaleoriented. methodical and discerning as it has gone about unfurling its retail umbrella over different segments of the industry. non-profit model of business. and the imminent entry of Zara and TopShop. with a new store brand. Fashion Yatra.
and emphasis on adequate store level profitability rather than maximising revenue per square foot has helped Trent ride through the recent global economic recession. “We start wrapping up the platform only when we are sure it’s going to be rewarding for both customers and shareholders.” It is this solid foundation that has led to the company establishing itself as a leading operator in a challenging environment. Malls have become a hub and a footfall driver. Mumbai-400011. a whole-day event that includes buying. Trent is all set to scale up — to increase its footprint across segments. Ind. expand into new geographies and increase penetration into existing markets – and to expand its bouquet of offerings by exploring new channels and new formats. a movie and eating at restaurants. 6-10 Haji Moosa. While Trent has been learning to craft a sustainable model for growth. Patrawala DrEMoses Rd Mahalaxm.Estate. Maharashtra. who joined Trent in 1999 and is currently business head for Fashion Yatra and Sisley.” says Smeeta Neogi. it has had to contend with a rapidly morphing business milieu.NSE 3 Aug Aug TSR Darashaw Ltd. “Shopping is now a form of entertainment. head of marketing at Westside.RETAIL INDUSTRY Bloomberg Reuters ISIN Demat Market Lot Listing Financial Year End Book Closure Month AGM Month Registrar's Name & Address GROUP 4 . “The growth of the mall culture has changed the way people shop.BO INE849A01012 1 Mumbai. so Westside’s focus is on having a presence there rather than going for stand-alone stores. And.” says KVS Seshasai.” A continuous process of tracking customer preferences and consumer behaviour. AREAS OF BUSINESS ALLIANCE BUSINESS SCHOOL 2009-2011 Page 70 PGP .MARKETING B TRENT IN TREN. The mall brings to the table multiple reasons why customers can visit you. 91-22-66568484 “When starting a new format we try and validate the business in different scenarios. as the Indian economy turns around and the retailing industry delivers newer opportunities and a greater range of possibilities.
and also stocks movies. artifacts and a range of home accessories. women and children.RETAIL INDUSTRY • GROUP 4 . footwear and accessories for men. this chain has a range of over 100. fruits. including staple foods. • Landmark: A leader in the books and music category. • Fashion Yatra: The stores bring quality fashion at low prices to value conscious customers in towns across India.000 titles in books and music. gift items and stationery. vegetables. along with furnishings.MARKETING B Westside: With a number of stores across India. toys. dairy and nonvegetarian products. • Star Bazaar: This hypermarket chain offers a wide choice of products. CHAPTER-5 ALLIANCE BUSINESS SCHOOL 2009-2011 Page 71 PGP . beverages. this chain offers clothes. health and beauty products.
Advertisement. The performance analysis can look into various aspects like sales.MARKETING B Comparative Analysis and Interpretation 5 Comparative Analysis and Interpretation: The Retail industry in India has basically eight major players according to capitaline. investment and merger and acquisition. Ratio analysis and Trend analysis(i. The company which we are considering for analysis are: Pantaloon Retail India Limited Shopper’s Stop ALLIANCE BUSINESS SCHOOL 2009-2011 Page 72 PGP . To properly judge how well a company or investment is performing it is imperative that the company be compared to the performance of the industry in which it competes. A comparative study of these companies forms the essence of this chapter.e.) Quantitative Analysis and qualitative analysis based on pricing. profitability.RETAIL INDUSTRY GROUP 4 .
44 288.295.96 346.661. This comparative analysis based on following points: • • • Profitability Ratio Analysis Trend Analysis 5.66 1.55 451.44 2005 1.99 602. profit and ROCE (Return on Capital Employed) and RONW (Return on Net Worth) which give as clear picture about the major player in the market.10 514 1.6 Sales of all Major Companies in (crs) Sales of the company Pantaloon Shopper’s Stop Trent Vishal Retailing Source: Capitaline 2009 6.31 2007 3.1 Profitability: In this profitability we will take sales.1 Sales: The sales are usually an important measure for those companies in the retail industry.79 899.206.93 515.42 1.961.96 677. it measure the amount of product that a company sells relative to its competitors.31 PGP ALLIANCE BUSINESS SCHOOL 2009-2011 Page 73 . 5.005.03 2008 5. 5.393.MARKETING B Vishal Retailing Limited. measurement and research.32 146.95 507.084.1 Quantitative Analysis: Quantitative analysis is a business or financial analysis technique that seek to understand behaviour by using complex mathematical and statistical modelling.1.65 2006 1.RETAIL INDUSTRY Trent GROUP 4 . and can also reflect consumer spending habits.88 1.400. Table 5.1.12 234.1.392.
This is because pantaloon has more outlets as compared to other players.Done by group.99 26. data taken from Capitaline Interpretation: From this graph it is clearly seen that Companies are growing rapidly interms of sales.86 2007 119. The exact profit of the company is calculated by deducting the cost associated with its production and sales.03 19. even deducting the depreciation and tax.16 27. but when seeing the shoppers stop they had the smooth growth by equal level.RETAIL INDUSTRY GROUP 4 . which is not the exact profit.38 2005 38.97 32.41 2006 64.75 2008 125.11 24.19 Sales Graph for all Major Companies in (crs) Source.58 -63.Trent retail had fall in the sales by nearly 1% from 2008 to 2009 due to some external problems.MARKETING B Figure 5. 5. Vishal and Tent.55 19. Vishal retail is also growing at the good phase .7 Profit of all Major Companies in (crs) Profit of the 2009 140. Finally overall situation of the retail industry is good in terms of sales.2 32. If we see the graph pantaloon had the tremendous growth during 2008.97 6. Majority of the share is held by Pantaloon followed by Shoppers Stop.1.1.2 Profit: Company’s revenue minus cost of goods sold is Gross profit.72 26.06 PGP company Pantaloon Shopper’s Stop Trent ALLIANCE BUSINESS SCHOOL 2009-2011 Page 74 . Table 5.
20 Net Profit Graph for all Major Companies in (crs) Source.MARKETING B 40. The profit in the 2005 was low because of the fixed cost involvement but pantaloon company had over came the fixed cost by selling more products.Finally Pantaloon had the good profit and followed by Trent In 2009.48 GROUP 4 .RETAIL INDUSTRY Vishal Retailing Source: Capitaline -94. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 75 PGP . But considering the shoppers stop their profit is in negative due to less sales and opening of new outlets which lead them loss but any how they will have a profit in upcoming year. Similar case. advertisement and other strategy. with Vishal they are opening many branch in southindia which leads to huge investment.64 25. thus the reason their profit is in negative .02 Figure 5. That is it had achieved the breakeven point. data taken from Capitaline Interpretation: From this graph it is clearly seen that Pantaloon has the highest Profit throughout all 5 years which tells us that the company is in good position followed by Trend. Shopper stop and Vishal. This is because pantaloon are able to attract much customer when compare with others through their pricing strategy. Tents retail is next company which had the profit in year 2009 other than pantaloon. thus they lead to huge profit .06 12.39 3.Done by group.
87 15.19 16.48 10 5.8 Shoppers stop 15.3 ROCE (Return on capital Employed): Return on Capital Employed is one the measure which company used to ascertain the return on their capital (equity plus long term outsider liability).42 5.52625 16.14375 Figure 5.This measure narrows a better understanding of company’s ability to generate returns from its availability base.17 17.21 ROCE Graph for all Major Companies Source.79 14.91125 8.1.Done by group.69 11. Table 5.59 12. data taken from Capitaline ALLIANCE BUSINESS SCHOOL 2009-2011 Page 76 PGP .8 ROCE Percentage of all Major Companies Year/companies ROCE 2005 2006 2007 2008 2009 Source: Capitaline Pantaloon 19.RETAIL INDUSTRY GROUP 4 .6 Vishal 16.87 3.1.2925 9.87 0 Trent 9.02 22.9 10.MARKETING B 5.45 0 Industry Average 10.86 13.17625 9.11 24.
1.21 7. 5.6 17.36 0 Trent 7.22 RONW Graph for all Major Companies ALLIANCE BUSINESS SCHOOL 2009-2011 Page 77 PGP .5% except Trent.57 6. again lead by Vishal retail.4 8.87% because the industry average is 9.74 13.27 2.07 3.32 4. vishal retail had highest return with 17.02 8.11 Figure 5.43 0 Industry Average 11.22 14.83 Shoppers stop 21. In year 2008 ROCE reduced for the Shoppers stop and Trent to 5. In year 2007 all the companies are above the industry average 9. In year 2006 Vishal retail had the highest ROCE with 24.9%.02% and the industry average is 16.8575 11.46 Vishal 13.but when we see the year 2009 Pantaloon takes a lead and its only company which is above industry average 8.89 25.55 5.81875 8.9 RONW Percentage of all Major Companies Year/companies RONW 2005 2006 2007 2008 2009 Source: Capitaline Pantaloon 24. Over all ROCE decreased for all the company this because of the increased capital base.14% and all other companies are falls below the industry average. which reduce the shareholders earnings.87 9.4 RONW (Return on Net worth): Return on net worth describes the return generated on the owned funds which represents the owners of the business.MARKETING B When Comparing with the industry average in year 2005 Pantaloon takes the lead with 19.17%.45%.1. Table 5.44 25.86 20. the other industry which is above the average is Shoppers stop because of increase in borrowing.87% almost all the other companies are above industry average 10.RETAIL INDUSTRY Interpretation: GROUP 4 .2%.12 10.
5.74% this mainly due to the high sales by the company. followed by Shoppers stop.RETAIL INDUSTRY GROUP 4 . the ratio analysis provides useful conclusions about various aspects ALLIANCE BUSINESS SCHOOL 2009-2011 Page 78 PGP .6% above the industry average 11.44% which tells the rate at which this company is growing and above the industry average13. Trent and for the first time pantaloon falls below the industry average with 7.Done by group.83% above the industry average 4. In year 2009 pantaloon takes a lead with 6. followed by Trent for other industry data’s are not available so it’s difficult to compare.4% of return.2 Ratio Analysis: Ratio analysis is a technique of analysis and interpretation of financial statements. Vishal and the Trent which is below the industry average.8%. As compared to other tools. In year 2008 Vishal retail the only industry above the industry average with 11. Over all if we see that Vishal retail had the good RONW throughout the five years.32% and all other industry falls below the industry average this is because the companies had invested much in the retail outlet that they are not able to get return that much.81%. followed by pantaloon.1. followed by shoppers stop.86% of return above the industry average 8. data taken from Capitaline Interpretation: In year 2005 the RONW for pantaloon is high with 24.MARKETING B Source.11%. shoppers stop and Trent. In year 2007 again Vishal retail had 25. In year 2006 Vishal retail had the high RONW with 25.
49 1.Equity: It is also known as “External – Internal equity ratio”.2 0.1.MARKETING B of the working of an enterprise.45875 0.17 1.22 Shoppers stop 0.67 1.14 0.4 0.86 Industry Average 0.1 Debt.7575 ALLIANCE BUSINESS SCHOOL 2009-2011 Page 79 PGP .19 Vishal 0.19 1.71 0.3 0.19 1.13 0.2. But for analysis we are considering only two main ratio like Debt–Equity Ratio and Current Ratio 5. Debit – Equity ratio may be calculated as follows: Debt – Equity ratio = Debt/Equity (or) Outsiders Fund/Shareholders Funds (or) Long-Term Debts/Shareholders Funds The ideal ratio is 2:1.10 Debt-Equity Ratio of all Major Companies Year/companies debit Equity 2005 2006 2007 2008 2009 Source: Capitaline Pantaloon 1.84 0.94 2. The relationship between borrowed fund and capital fund is shown in the debt – equity ratio. A low ratio implies a greater claim of owners than creditors. It indicates the relative proportion of debt and equity in financing the assets of a firm.75 1.63875 0.52875 0.RETAIL INDUSTRY GROUP 4 . the claims of creditors are greater than the owners.72 Trent 0 0.6975 0. It is the process of analyzing and interpreting the various ratios for helping in decision making. Table 5.48 0. High ratio shows that.
This ratio has shown a increase in the following year 2008.67 followed by Shoppers stop with0.14 and 0. Again in the previous year this ratio has shown a slight upswing.52 which is good for the industry.14(Cr) in 2005.17 respectively.84 to 0. The debt-equity ratio for the years 2006 and 2007 were 1.2 respectively.13. This ratio has shown an increase in the following two years-2006 and 2007.217.19 and 1.26 lakhs(equity was Rs.23 Debt-Equity Ratio Graph for all Major Companies Source.67 to 1. In the year 2008 it again went down to 0. In year 2006 only two companies are above the industry ALLIANCE BUSINESS SCHOOL 2009-2011 Page 80 PGP . This shows that the company funds its investments mainly through owners’ contributions than borrowings.72 and even below the industry average for the last four years.71 all this companies are above the industry average of 0.Done by group. Debt-equity ratio for Trent was 0 in 2005.84 and Vishal with 0. This means that the outsiders’ claim was 1.MARKETING B Figure 5. but in case of Vishal retail it is opposite they are rising fund for outsider much. This implies that the company has a good capital structure. By observing the data of the last five years it can generally be seen that the Debt-equity ratio of Pantaloons is well below the industry standard of 2 and above the industry average.22. data taken from Capitaline Interpretation: We can see that the Debt-equity ratio has decreased for Pantaloons from the year 2005 to 2009 from 1. The debt-equity ratio for the years 2006 and 2007 were 0. When we see for shopper stop the ratio has decreased from the year 2005 to 2009 from 0.22 times the owners’ claim.RETAIL INDUSTRY GROUP 4 . In year 2005 the Pantaloon had high debt equity ratio with 1. This is because the company had negligible debt of Rs.
75. In year 2007 Vishal retail had high ratio with 1. 5.41 1.75 1.8225 Figure 5. Current ratio is the ratio of total current assets to total current liabilities.74 1. expenses outstanding.84 1. bills receivable.74 Shoppers stop 0.54 1. stock. cash at bank.45 which tells us that companies are using the owners fund instead of borrowing it.06125 2. bank overdraft.2.96 1.59 Industry Average 1.MARKETING B average 0. bills payable. instalment payable over on long term loans and amount payable in short period (one year).16125 1.11 0.24 Current Ratio Graph for all Major Companies ALLIANCE BUSINESS SCHOOL 2009-2011 Page 81 PGP .69 and 0.39 1. prepaid expenses and amount receivable within a year. They are creditors.96 Trent 1. Current assets are easily converted into cash within a period of one year.94.17 Vishal 2.7 1. followed by pantaloon both of this companies are above the industry average 0.RETAIL INDUSTRY GROUP 4 .6 1.6975 1. Table 5.45 1. The formula for the calculation of current ratio is: =Current Assets/Current Liabilities Current ratio is preferred to be more than 1 as it is the ratio of current assets to current liabilities even though the industry standard requires it be 2:1 for the company to be considered to have operational stability.11 Current Ratio of all Major Companies Year/companies Current Ratio 2005 2006 2007 2008 2009 Source: Capitaline Pantaloon 1.9 1.55 1.95625 2.63.2 Current Ratio: Current ratio is the most common ratio for measuring the liquidity.4 1.53 2. debtors.1. They are cash in hand.88 1. Same in case of year 2008 and 2009 both pantaloon and Vishal Retail are above the industry average 0. Current liabilities are payable within a period of one year.
4 and above over the last five years. data taken from Capitaline Interpretation: We can see that Pantaloons has rendered efficient operations by maintaining a current ratio of 1. In the following years this ratio slightly increased to 1. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 82 PGP .8 which is not a good sign for the company.Done by group. most of the years the companies falls below the industry average. Since the ratio is started declining because the current liabilities increased at a faster rate as compared to the current assets. current liabilities were more than current assets.83 in 2008 and below the industry average in all years.45 and above over the last five years. But as we see the last five years’ data this company has always been below industry standard and industry average throughout the five year. it has rendered efficient operations by maintaining a current ratio of 1. In 2005 this ratio slightly went below 1 (i.84 in year 2006 and finally in 2009 current ratio is 1.MARKETING B Source.).e. Shoppers Stop’s current ratio was 1. Vishal retail has crossed the industry standards in year 2005 with ratio as 2. When we see for Trent. over all in this ratio.54 in the year 2007. The current ratio of Pantaloons has come close to industry standards in the last two years with 1.59.02.96 in 2007 and 1. But in the year 2009 the Current ratio had crossed the industry standards and above the industry average 1.7 very huge which is not good for the company but it had reduce the standard to 1.RETAIL INDUSTRY GROUP 4 .
858*t o Vishal sales Turnover(Y4) =-275.945+321.MARKETING B 5. o Pantaloon sales Turnover(Y1) =-666.853+231.908+72.12 Sales Trend of all Major Companies in (crs) Year Time Pantaloon Shoppes stop Trent sales Vishal sales PGP ALLIANCE BUSINESS SCHOOL 2009-2011 Page 83 . With the past five year values a trend equation by using least square method is obtained.493*t o Trent sales Turnover (Y3)=193.1.686*t o Shopper’s shop sales Turnover(Y2) =243.3 Trend Analysis: Simple Linear Regression The growth of the five major players of the retail sector is being studied with the trend analysis by taking the variables like sales and profit.031*t With the help of the linear equation shown above the forecasted values are being found and shown in the table and graph Table 5.3.1 Sales Trend: From the past five years value the linear equation for the different variables the linear equation is calculated as. Y – Projected value (sales and profit) a – Intercept of Y b – Slope of the line t – Any value of the time series Using this equation the values of the sales and profit for the year 2010 and 2011 is being forecasted for the major four companies. 5.658+1448.1.RETAIL INDUSTRY GROUP 4 . Y = a + bt. The line has an equation. Where.
42 1.RETAIL INDUSTRY GROUP 4 .31 288.005.206.55 2007-2008 4 5.Done by group Interpretation: From the graph it’s clear that trend of all major companies are having increasing trend.458 (crs) followed by Vishal retail with Rs.MARKETING B (y3) 234.400.03 1650.961.96 677.99 515.056 (crs).811 (crs) and Trent by Rs.304(E) Source: Capitaline and Estimation done by group Figure 5.392.811(E) 2010-2011 7 9474.44 451.458(E) 1632.25 Sales Trend Graph for all major companies (crs) Source.93 2008-2009 5 6.661.393.056(E) 703. Shopper’s stop with Rs. when we compare with the companies the pantaloon has high sales which is estimated for the year 2010 as Rs.88 1.66 514 631.241 (crs).96 2006-2007 3 3.10 2009-2010 6 8025.44 602.79 899.084.295. 631. In Year 2011 its sales estimated as ALLIANCE BUSINESS SCHOOL 2009-2011 Page 84 PGP .31 1.8025.272(E) period (t) Sales (y1) sales(y2) 2004-2005 1 1.1650.32 346.65 1.12 2005-2006 2 1. 1632.144(E) 1864.914(E) (y4) 146.241(E) 1971.95 507.
GROUP 4 - MARKETING B
pantaloon with Rs.9474.144 (crs) followed by Vishal retail with Rs.1971.272 (crs), Shopper’s stop with Rs. 1864.304(crs) and Trent by Rs. 703.914 (crs). Over all the companies sales will be good in future according the regression method.
From the past five years value the linear equation for the different variables the linear equation is calculated as,
Pantaloon Total income(Y1) =-666.658+1448.686*t
o Shopper’s shop Total income (Y2) =243.853+231.493*t o Trent Total income (Y3)=193.908+72.858*t o Vishal Total income (Y4) =-275.945+321.031*t With the help of the linear equation shown above the forecasted values are being found and shown in the table and graph
Table 5.13 Profit Trend of all Major Companies in (crs)
Time period Pantaloon Shoppers stop Year (t) Profit (y1) profit (y2) 2004-2005 1 38.55 19.03 2005-2006 2 64.16 27.11 2006-2007 3 119.99 26.2 2007-2008 4 125.97 6.97 2008-2009 5 140.58 -63.72 2009-2010 6 177.611(E) -52.574(E) 2010-2011 7 204.198(E) -71.138(E) Source: Capitaline and Estimation done by Group
Trent Profit(y3) 19.06 24.38 32.41 32.86 26.75 34.25(E) 36.636(E)
Vishal profit (y4) 3.02 12.39 25.06 40.64 -94.48 -52.699(E) -69.374(E)
Figure 5.26 Profit Trend Graph for all Major Companies in (crs)
ALLIANCE BUSINESS SCHOOL 2009-2011 Page 85
GROUP 4 - MARKETING B
Source- Done by group Interpretation: From the graph it’s clear that trend of pantaloon and Trent will be increasing in terms of Profit but the companies like Shopper’s stop and Vishal will have profit in negative even for next two years which is estimated. When we compare with the companies the pantaloon has a high profit which is estimated for the year 2010 as Rs.177.611 (crs) followed by Trent with Rs. 34.25 (crs), Shopper’s stop with Rs. -52.574 (crs) and Vishal retail by Rs. -52.699 (crs). In Year 2011 its Profit estimated as pantaloon with Rs.204.198 (crs) followed by Trent with Rs.36.636 (crs), Shopper’s stop with Rs. -71.138(crs) and Vishal retail by Rs. -69.374 (crs). Over all the companies profit will be good for Pantaloon and Trent in future according the regression method.
ALLIANCE BUSINESS SCHOOL 2009-2011 Page 86
GROUP 4 - MARKETING B
5.2 Qualitative analysis:
Qualitative Analysis is the process of examing the health of the company by loking at non financial Information such as the management team, culture of the company, business model, and competitors. Qualitative analysis of the companies done by SWOT, PRICING and ADVERTISING
To have comparative analysis in terms of qualitative first we can see about SWOT Analysis which means Strength, Weakness, opportunities and threats. by looking into this component we can easily do the comparative analysis for the major companies.
Presence of the Company and its group formats in almost all segments Specialized services give niche advantage to the Company to have better and faster access to the customer needs. Cost control initiatives and frugal culture that is critical in a retail operations business Periodical reviews of the various operations have been done on regular basis to identify the any possible threat and address the same within time. Process of Enterprise Risk Management as a continuing process, in order to identify the new risks and to define and establish the control process to mitigate the identified risks. Controls in SAP. Weakness: Increased size of operation has the risk of execution and management.
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5. people etc and this can have an impact on the margins. Competitive advantage over competitors and also ensuring that the Company‘s expansion plans on track. Weakness: Late foray into value retailing with 51% stake in promoter owned company. value and specialty retailing. for any company the cost of doing business.2. Healthy financial position with low gearing. High spend on store makeovers and interiors to ensure pleasant shopping experience. In the current environment.MARKETING B Opportunities: The Company has formats for various segments of the customers and capturing the maximum customers from each segment by having appropriate locations for each format. Presence across retail segments. lifestyle. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 88 PGP . Loyal customer base accounts for 63% of revenue. real estate. Threats: The organized retail business is evolving faster and with the availability of various options from the Company as well as the competitors. including costs associated with energy.RETAIL INDUSTRY GROUP 4 . Low risk and sturdy business model.2 Strengths: Shoppers stop: Pioneer in departmental format. Opportunities: Low rentals due to long lease contracts. the business risk has increased. With the increase of the size of operation the Company will also have the risk of the execution and management.1.
Opening up of economy for free entry of foreign retail players. No standardization of product. the company seems to be more stable and less risky. Employee shortage due to rapid growth in retailing. Benefit from the 16% increase in discretionary spend in Indian consumers because of presence across formats. Revenue of the company is increasing over the years.MARKETING B Competition from standalone specialty stores. more control over manufacturers (quality. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 89 PGP .2. Threats: Impact of slowdown in consumer spends to be felt on department stores. cost). Reach is very good with continuous growth in the number of stores at a rapid rate. As it could be observed that percentage of sales dropped till 2006 but after that. Collaborations with foreign players because of a national brand. no intermediary costs. Entry into TIER II and III cities. Focus on 2 parameters – style and affordability Huge financial base is there at the company‘s disposal which amounts to around Rs 2 billion from sale of Lakme Adept at conducting marketing research often and has a good in house team for it.3 Strengths: Trent: Sold in house brand only – higher margins. 5. It sales has increased very steeply over the years. This signifies that company is trying to increase their market share and with the increasing consumption. Opportunity: 30% CAGR in organized retailing to result in better footfalls and conversion rates.1.RETAIL INDUSTRY GROUP 4 .
Opportunities: There is 10 billion dollar untapped market in India for Trent to capitalise on. (Source: Crisil) 5. Trent could enter the food retail business as a study on food and grocery retail market as the food retail sales make up for close to 63 per cent of total retail sales in American retail chains. If own brands could be focused on. The company is still concentrating much on the renowned brands instead of own brands with the ratio of 70:30. flexibility and high returns.RETAIL INDUSTRY GROUP 4 . Weakness: The company is too focused only on apparels and jewellery which are seasonal in nature and is not willing to diversify into other product types. time pricing and price discounts. Market share of the unorganised sector still is ranges to 95% and if not looked upon. Threats: Organised sector is open for other players and with new and new retailers improving the competition in the market by mushrooming their retail outlets.MARKETING B Trent has a strong supply chain functioning. (Source: Crisil) Trent invests very heavily in promotion and brand building but still suffers from poor economies of scale. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 90 PGP .1. might increase further. (Source: KSA Technopak) Trent positions its products in Westside as value for money which could be further enhanced by venturing into low cost product business to tap the lower middle class market through a downward stretch.2. they could bring in more loyalty.4 Strengths: Vishal: Vishal follows the concept of EDLP.
Vishal could diversify into a brand retailer. procurement of goods directly procurement of goods from the small and medium size vendors and manufacturers. (Source: BLB Research) With the store cost skyrocketing. To reduce cost. Threats: ALLIANCE BUSINESS SCHOOL 2009-2011 Page 91 PGP . Vishal retail could extend itself into tier III and tier IV cities more to challenge the unorganized retailers with a different shopping experience for the consumers. Vishal emphasizes on backward integration.MARKETING B Vishal Retail is into wide range of consumer goods which are sold under the value retail tag. Vishal has a very strong logistics and distribution system. Vishal has a strong recruitment cell that manages its human resources very well.RETAIL INDUSTRY GROUP 4 . retailing the major apparel in India as well. Opportunities: Vishal could focus more on the FMCG retail and has huge scope of own brand promotion to a different level. (Source: BLB Research) Vishal suffers from a high attrition rate of 35% which is not a good figure for a retail sector company to manage its resources. Weakness: Apparels comprise of 63% of the revenue of the company which could be a risky figure looking at the season nature of the products. Vishal does in house production of apparels. Vishal targets the middle and lower middle class customers that form a very huge percentage of the total shopping population in India. The company should try focus on evening it out and concentrating on the other product offerings as well. Vishal still operates in large space outlets.
ALLIANCE BUSINESS SCHOOL 2009-2011 Page 92 PGP . we can have the comparison of the pricing strategy of major players in retail sector.2. By-Product Pricing Setting the price for by-products in order to make the price of the main product more competitive. season or event to increase sales volume Cash Rebates A refund of part of sometimes the full price of the product following purchase. More and more stores are mushrooming in India providing latest in fashion apparels.RETAIL INDUSTRY GROUP 4 .1 Pantaloon: The major pricing strategies followed by pantaloon are.MARKETING B Vishal faces serious competition from the unorganized sector with whom it directly competes with through its pricing strategies. Price bundling is used to increase both unit and rupee sales by bringing traffic into the store. Vishal Retail needs to devise strong strategies. though some rebates are offered at the time of purchase Bundle Pricing It is the practice of offering two or more different products or services at one price.2 Pricing: Pricing is the most important in the retail industry. to compete with these and maintain its value prices. 5. 5.2. Value Pricing A pricing strategy in which a product's price is actively dependent upon its demand Special-event Pricing It advertised sales or price cutting that is linked to a holiday.2.
2.RETAIL INDUSTRY GROUP 4 .2. retail-operating expenses. The practice is intended to exploit the (not necessarily justifiable) tendency for buyers to assume that expensive items enjoy an exceptional reputation or represent exceptional quality and distinction.3 Trent: The major pricing strategies followed by Trent are.2. Vouchers 5. The model works on high inventory turnover and lower operating costs. based solely on the price. Segmented Pricing For different segment people it will follow the different pricing base on age and gender.2.2.The store portrays a low status image and offers fewer shopping frills. Competitive Pricing PGP ALLIANCE BUSINESS SCHOOL 2009-2011 Page 93 . 5. Premium Pricing It is the practice of keeping the price of a product or service artificially high in order to encourage favourable perceptions among buyers. and the desired profit.4 Vishal: The major pricing strategies followed by Vishal are Discount Pricing Here low prices are used as the major tool for competitive advantage as it works best for value based customers . Profit margins are kept low to target price-based customers. Mark-up Pricing It drives cost-oriented pricing wherein a retailer sets prices by adding per unit merchandise costs.MARKETING B 5. Wide-price range The pricing range may be varied from wide range in one particular product.2.2 Shoppers stop: The major pricing strategies followed by shoppers stop are.
Advertisement helps the companies to increase their sales.MARKETING B Comparing with the market they will keep pricing for the product.14 Comparing Advertising Strategies of the four companies Advertisement strategy Brand Endorsement Billboards Print Ads Audio Promotion Catalogues Events Shoppers stop Trent Vishal - Pantaloon - - - Interpretation: Above table represents comparison between the advertising strategies of the four companies. Shoppers stop focuses on brand endorsement. are all different types of psychological pricing. Comparing Advertising strategies of the four companies: Table 5. print ads and events as it is a premium store. Prestige pricing. Now shoppers stop is ALLIANCE BUSINESS SCHOOL 2009-2011 Page 94 PGP . and Vishal Retail. shoppers stop. some brief comparison are made based on advertisement between companies. reference pricing and odd –even pricing. Its brand ambassador is Neil Nitin Mukesh who is a rich and stylish model. 5.2.3 Advertising: Based on advertisement we can made comparative analysis of the major players in the industries like Pantaloon.RETAIL INDUSTRY GROUP 4 . Psychological Pricing Psychological pricing is a method of setting intended to have special appeal to consumers. Trent.
Pantaloon focuses on all kind of advertising strategies to attract as many customers as it can.RETAIL INDUSTRY GROUP 4 . audio promotion or events because they focus on earning maximum revenue. So it targets those middle class people who follow fashion trends.Followed by Trent.MARKETING B also coming up with billboards but it doesn’t offer audio promotion (announcements) and catalogues inside stores Whereas Trent stores follow brand endorsement and all other discussed strategies for shoppers stop except providing catalogues to the customer. billboards. Overall pantaloon is leading in the advertisement sector. Its brand ambassador is yuvraj singh which conveys that this store is meant for young generation. shopper stop and Vishal retail. Its brand ambassadors are Bipasha basu and zayed khan who are considered as fashion icons. Vishal retail stores only follow Print ads in newspapers and catalogues containing discounts and offers as their advertising strategy but they don’t go for brand endorsement. ALLIANCE BUSINESS SCHOOL 2009-2011 Page 95 PGP .
RETAIL INDUSTRY GROUP 4 .MARKETING B CHAPTER-6 Recommendations and Conclusion ALLIANCE BUSINESS SCHOOL 2009-2011 Page 96 PGP .
This helps retailers adapt to the very different shopping patterns that can exist within the country and even within regions.RETAIL INDUSTRY GROUP 4 . coupled with poor quality of the distribution sector. most players appear to be gravitating towards the hypermarket format. ranging from discount stores to supermarket to hypermarkets to specialty chains. come up with innovative and affordable products and create a desire among the masses for their products.1 Future outlooks Organized Indian retailers are trying out a variety of formats. results in logistics costs that are very high as a proportion of GDP. 6. which have to be maintained at an unusually high level. Retailers such as Pantaloon. we can look forward to the emergence of balanced multi format models. Provogue. or the Tatas are working towards exploiting this model which is perceived by consumers as more value-enhancing. and inventories. of late.2 Recommendations Poor quality of infrastructure. The retailers will exploit every possible avenue. Every year. But in the long run. So. what is most likely to succeed is a more balanced multiformat strategy.MARKETING B 6 Recommendations and Conclusion: 6. Distribution and marketing is a huge cost in Indian ALLIANCE BUSINESS SCHOOL 2009-2011 Page 97 PGP . organized retail will grow and enhance its market share. However. It will certainly out do unorganized retail in the near future.
To compete in this sector one needs to have up-to-date market information for planing and decision making. Even though penetration of organized retail is very low. That will be the coming struggle. Rural markets emerging as a huge opportunity for retailers reflected in the share of the rural market across most categories of consumption. The increase in FDI flow has strengthened the foreign political relations and now foreign companies are trying to persuade the Indian Parliament to increase FDI capital depending on the sector.It provides ample opportunities to the market players to capitalize on the same and take the first mover advantage. This would change the consumers’ average spending pattern. make them brand sensitive. and when they do have brand knowledge they would demand more. They need to overcome the challenges before them and transform into the next-door stores which offer discounts. The second most important requirement is to manage costs widely in order to earn at least normal profits in face of stiff competition.Strategic course of action for the coming years is required to be taken by the major players to sustain and grow in this ever growing market The Indian retailing sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. It's a lot easier to cut manufacturing costs than it is to cut distribution and marketing costs. Direct selling and personal selling should also be ALLIANCE BUSINESS SCHOOL 2009-2011 Page 98 PGP . they have a brought revolution in the country. but foreign players will come in and challenge the locals by sheer cash power. IT is a tool that has been used by retailers which has improved and eased thw way with which modern opeartions are carried on efficiently and still with foreing players coming up the opportunities for IT implementation in Retailing sector is very high . the power to drive down prices.RETAIL INDUSTRY GROUP 4 . They should prove themselves as ‘customer-oriented’.MARKETING B consumer markets. Indian companies know Indian markets better. They should also establish a good supply chain network and maintain good warehouses. 6.3 Conclusion: The Indian retail industry is going through a boom period.
ALLIANCE BUSINESS SCHOOL 2009-2011 Page 99 PGP . challenges and future prospects in Indian retail sector. chanel. trussardi. then they can surely turn even window shoppers into buyers. The global retail giants like walmart. DKNY and Debenhams made plans to enter the Indian market. economic. mango and many other global brands marked their presence in india by implementing licensing and franchisee agreements. mother care. Spirit. It plays a major role in contributing towards country’s GDP too. The industry analysis of the Indian retail industry high lights many significant patterns prevailing in india. Versace. A huge number of shopping malls have come up in the recent past generating 20 million square feet retail space. it reveals oppurtunities. The PEST analysis investigates political. pantaloon. guess. tesco. social and technological factors of industry.MARKETING B added to the services offered by the stores in the malls. k mart. shoppers stop. This report provides an industry analysis of Indian retail sector. trent. pricing startegies etc. The Indian retail industry is directly based upon income of consumer. ikea. retail formats. Here we have compared various companies in Indian retail industry on various aspects like market share. next. This would take retailing in India to new heights. its growth drivers and different retail formats in india. zara. Existing retail space in 160 malls is nearly 32 million square feet. The report also reflects the evolution of Indian retail industry. SWOT analusis boasts of the strength and reveals weaknesses of Indian retail industry and enlightens on the oppurtunities and threats before Indian retail industry. promotion advertising. Organized retailing now accounts for 6% out of total retailing however same is predicted to extend to 10 % by the year 2010. so it depends both upon microeconomic and macroeconomic factors. comparing the major players in the country like reliance. gap. The Indian retail environment has attained $210 billion witnessing a strong development paced at 5% per year. Hence there is need for organized retailers to analyze and understand the factors that would influence consumer behavior and tailor themselves accordingly. Retail industry is largely led by private industries. fcuk.RETAIL INDUSTRY GROUP 4 . If they succeed in achieving the above requirements. This industry offers the large variety of products for all types of consumers from middle class to high end premium users.
in www.caclubindia. tanishq and crossroads have planned to invest over 500 crores. Trent is on the edge to take its both the brands star bazaar and Westside to new cities.india.com www.com www.indianmba.in www.moneycontrol.com www.com/ www.com/ www. Finally the objective of the study has been full filled.marketresearch. trent reliance. Pantaloon is the market leader in the organized Retail sector.indiatimes.rncos.com www.naukrihub.com/ http://www.capitaline.RETAIL INDUSTRY GROUP 4 .com PGP • • • • • • • • • ALLIANCE BUSINESS SCHOOL 2009-2011 Page 100 . Also pantaloon planned to add 8 big bazaar malls within next 6-8 months.MARKETING B Companies like shoppers stop.com http://www.com www. Bibliography: • • • http://economictimes.ibef.bse.Trak.valuenotes. Meanwhile shoppers stop has recently geared up for expansion of present ones to add 11 new stores including 2 hypermarkets. lifestyle.
INDIAN RETAIL INDUSTRY –opportunities . Published by IBEF (Indian Brand Equity Foundation) ‘Organized Retail in India: The Next Growth Frontier’ by Pankaj Gupta.RETAIL INDUSTRY • GROUP 4 .org www. Practice Head.MARKETING B www. senior lecturer from Bhubaneswar Institute of Management & information Technology . 2006 Outlook Business -‘The real story of India's retail boom’ by Pummy Kaul and Prashant Mahesh Mc Kinsey report .financialexpress.challenges and strategies by Prakash Chandra Dash.franchisebusiness.scribd. Consumer and Retail.com/doc/4204883/Productivity-in-retail-industry-in-India Segments in retail industry 2008 IBEF REPORT from Ernst & Young on Retail market & Opportunities .retailangle.ibef.com Ernst & Young.com http://business.by the retail practice of McKinsey & Company Retail : Market & Opportunities’. The Great Indian Retail Story. Business Line.`The Great Indian Bazaar: Organised Retail Comes of Age in India' .com http://www.com www.indiaretailing.gurgaonscoop.com www. 2006 Pharma's retail push. Bhubaneswar • http://www.mapsofindia. Tata strategic Management Group • • • • • • • • • • • • • http://www.in • • ALLIANCE BUSINESS SCHOOL 2009-2011 Page 101 PGP .
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