Market SizeSize

Market 2021 57,15,700Cr(P)

57,15,700 (F)
Retail Industry
Retail Industry Growth RateRate
2021 -7.47%(E)
(E)
Growth -7.47%

All figures based

on 2020-21data
in INR Crores

Revenue 23,996.1 2,251.78 5,253.78 1,096.5 20,201.92

Net Profit 1,165.31 -51.01 -649.64 -6.20 33.84
Founded 2002 1998 1997 2002 2007
Market Cap 2,07,009.36 30,294.64 18,203.57 5,421.64 2,985.27

Cost break-up of organized retailers Multi-brand retailers profitability Single brand retailers profitability
11.2% 15.5%
5-10% Material
Cost 8.0% 7.9% 11.8% 11.7%
10.9%
Power and 7.2% 7.2% 10.1%10.5%
10-15% 6.1% 9.4%
Fuel 5.4%
Employee 4.3% 7.1%
Costs
3.7%
3.0% 5.7% 5.5% 5.7% 6.1% 6.6%
5-10% 2.6%
Other 4.6%
1-2% 1.6%
expenses 0.6% 0.9%
70-75%
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Operating margins Net margins Operating margins Net margins

e-Retail growth (in ₹ Tn) News and Facts Other Major Players
1. Retail sales slowdown by 49% in
April of this year against pre-
4.8
pandemic level of April 2019.

2. Retail Inflation(CPI) moderated to

4.29% in April from a four-month
high of 5.52% in March. RBI projects
1.723 retail inflation at 5.1% in 2021-22.

0.381 3. Reliance Retail buys Future Group's

businesses for ₹24,713 crore and
FY15 FY20 FY25P provides operational support.

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 Market SizeSize
Market 2021 57,15,700Cr(P)
57,15,700 (F)
Retail Industry
Retail Industry Growth RateRate
2021 -7.47%(E)
(E)
Growth -7.47%

All figures based

on 2020-21data
in INR Crores

Revenue 23,996.1 2,251.78 5,253.78 1,096.5 20,201.92

Net Profit 1,165.31 -51.01 -649.64 -6.20 33.84
Founded 2002 1998 1997 2002 2007
Market Cap 2,07,009.36 30,294.64 18,203.57 5,421.64 2,985.27

Total Retail Market (in ₹ Tn) Organized Retail Market (in ₹ Tn)
91-95
11.5-12
62 66-67
57-58 7.4 7.1-7.3
39 5.9-6
3.24

FY15 FY20 FY21P FY22P FY25P FY15 FY20 FY21P FY22P FY25P

Organizedretail
Organized retail segment
segment composition
composition Organized Retail segments revenue (in ₹ Tn)
7.40 7.20
25.25% 20.61% 5.95
5.68
0.68%
21.86% 4.85
24.18% 3.24 4.00
2.86 2.40
1.72 1.90
0.38
1.38%
2.01% 4.03%
Food & grocery Apparel
Footwear Furniture & Furnishing
FY15 FY20 FY21E FY22P
Pharmacy Consumer durables, mobile and IT
Books & music Others E-retail B&M Retail Organized Retail

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 GrowthGrowth
rate of rate
Retailofsector
Retail sector

• Retail market grew at 10% CAGR Total Retail Market (in ₹ Tn)
for FY15-FY20 and 7.5% for FY20.
100 91-95
• Expected FY21 is predicted to 90
degrow at 7-8% due to national 80
lockdowns where store operations 70 62
66-67
and sale of non-essential 60
57-58
commodity were halted 50
temporarily. 40
39

• Essential commodities (food and 30

pharma) accounted for 56% of total 20
and still grew at 8-9% while non- 10
essential commodities suffered 0
greatly and fell by 25-28%. FY15 FY20 FY21P FY22P FY25P

• FY20-25 is predicted to grow at 8-

9% and FY22 to grow at 15-17% of Total Retail breakup FY19
which essential segment will grow 5.7%
1.4%
7.7%
at 8-10% and non-essential at 26-
28%. 28.0%
10.6%
• However, these projections were
dependent on market sentiments
being positive which will not occur 20.3%
as there will be pressure on retail 26.3%
again as second wave of Covid has
again led to lockdowns which will
deeply hurt the non-essential Apparel & Footwear Consumer Durables & IT
segment. Jewellery & Accessories Health & Entertainment
Home Décor & Furnishings Beauty & Personal Care
Others

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 Organized
Organized Retail Retail

• Organized Retail Penetration (ORP) is Organized Retail Market (in ₹ Tn)

estimated to be 10-12% of total 11.5-12
retail for FY21.
• Grew at 18% CAGR for FY15-20 and
7.4
expected to degrow by 19-21% in 7.1-7.3
5.9-6
FY21 as organized retail is 80%
comprised of non-essential goods
3.24
which fell by 25-27%.
• FY22 is expected to grow at 20-25%
as consumer confidence was back
and there was increase in store FY15 FY20 FY21P FY22P FY25P

footfall even seen by increase of

consumer durable, mobile and ORGANIZED RETAIL SEGMENT
furniture during festive season COMPOSITION
accompanied by economic factor of
low base year and high discretionary Others, Food &
spending. Books & 25.25% grocery,
music, 20.61%
• Non-essential segment has been 0.68%
expected to grow more in the future
as there is plan for more stores
spread across tier 2 & 3 cities with
increase in disposable income.
Apparel,
• Organized sector is expected to grow 21.86%
at 9-11% CAGR from FY20-25. Consumer Footwear,
durables, Pharmacy, Furniture & 4.03%
mobile and 1.38% Furnishing,
IT, 24.18% 2.01%

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 VerticalVertical
segments of Organized
segments Retail Retail
of Organized

• Implementation of GST, allowing 51% Organized Retail Market Size & Penetration FY20
FDI in multi-brand retail, and 100% in 2000
1800
1766 1844 70.00%

single-brand retail through automatic 1600 1505 1597 57.30%

60.00%
1400 50.00%
route will further contribute to 1200 40.00%
1000
reaching 13% ORP by 2025. 800 30.00%
600 26.60%
18.40% 13.60%20.00%
• Food & grocery account for 20% of 400
200
294 147 101
50 5.20% 10.00%
4.60%
organized retail and is one of the fastest 0 7.60% 8.10% 0.00%

Food & grocery

Pharmacy

Others
Consumer durables,
Apparel

Footwear

Furniture & Furnishing

Books & music

growing sector with added advantage

mobile and IT
of growing even in pandemic but still
ORP is just 4.6% showing huge
opportunity for growth but hindered by
unique services by unorganized sector
Market Size (in ₹ Bn) Organised Retail (% of total Retail)
and supply chain challenges. Sector
grew by 1-4% in FY21 and expected to
grow at 13-18% CAGR. Organized Retail Market Size & Penetration FY23P

• Apparel, footwear, consumer durables, 2500 2266

2087
80.00%
70.00%
1883
mobiles, IT, jewelry and watches are 2000
1688 70.20% 60.00%
other major contributors to the 1500 50.00%
40.00%
organized retail sector which are 1000 31.80% 30.00%
expected to increase ORP as the 22.20%
500 321 11.70%20.00%
younger generation with their 5.10%
153 141
9.80% 8.60% 26 10.00%
2.30%
disposable income are becoming more 0 0.00% Pharmacy
Food & grocery

Others
Apparel

Consumer durables,
Footwear

Furniture & Furnishing

Books & music

brand conscious.
mobile and IT
• Stringent lockdowns due to second
wave will hurt FY22 growth projections
as Q1 has suffered like in case of 49%
fall in apparel sales in April. Market Size (in ₹ Bn) Organised Retail (% of total Retail)

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E-RetailE-retail
& B&M&Retail
B&Msector
Retail sector

• E-retail segment of organized retail E-Retail growth (in ₹ Tn)

grew at estimated 10-15% in FY21
even though 90% of it comprises of
non-essential commodity sales as 4.8

people started preferring online

purchase due to social distancing
norms.
• It has been increasing its share
within the organized retail as it 1.723

went from 12% in FY15 to 23% in

FY20 and is now projected to reach 0.381
38-40% by FY25 of organized retail
sector. FY15 FY20 FY25P
• Expected Increase in demand after
the restrictions have lifted has
shown FY22 projections to be 25- Organized Retail segments revenue (in Tn)
30% growth rate.
• On the other hand, Brick & Mortar 7.40 7.20
(B&M) retailers saw an estimated
decline in FY21 of 30% which reset 5.68 5.95

it to 3-year-old levels. 4.85

• Even now, B&M retail is estimated 4.00

to grow at 20% in FY22 which still 2.86
3.24
leave its revenue to be lower than 2.40
FY20s and are going to be even 1.72 1.90

lower in reality due second wave

Covid lockdowns. 0.38

• B&M retail CAGR for next 5 years is FY15 FY20 FY21E FY22P
estimated to be 4-6%. E-retail B&M Retail Organized Retail

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Profitability
Profitability

• Single brand retailers’ margins fell more Single brand retailers profitability
than the multi-brand retailers’ in FY21 as 20.0%
they had a higher concentration of non- 18.0%
essential goods. 16.0%
15.5%
12.5-14%
• Margins are expected to jump back up to 14.0%
11.8% 11.7%
12.5-14% in FY22 but further increase will 12.0% 10.9%
10.1%10.5% 9.5-10%
9.4%
be tough due to fall in revenue and 10.0%
increased raw material and even these 8.0% 6.1% 6.6% 7.1%
5.7% 5.5% 5.7%
estimates will be higher than reality as 6.0% 4.6%
second Covid wave has caused lockdowns 4.0%
of these retailers throughout India. 2.0%
0.0%
• Multi-brand retailers catering to essential
commodities along with non-essential
items will soften the blow on margins.
They have expectedly fallen to 7-7.5% in Operating margins Net margins
FY21 due to their not being
commensurate fall in revenue and fixed Multi-brand retailers profitability
cost. 14.0%

• Increase in revenue with decrease in raw 12.0% 11.2%

materials costs will be necessary for
expansion of margins. 10.0%
8-9.5%
8.0% 7.9%
• Organized retailers will need to focus on 8.0% 7.2% 7.2% 7-7.5%
food and grocery sector as even though it 6.1%
6.0% 5.4%
is a challenge due to supply chain and low
4.3%
margins, it is far to big and is still growing 4.0%
3.7%
at the highest rate among all verticals. 2.6% 3.0%

2.0% 1.6%
• Apparels having the highest margin among 0.6% 0.9%
top verticals with brands ability to 0.0%
distinguish itself making it an attractive FY14 FY15 FY16 FY17 FY18 FY19 FY20FY21PFY22P
market for organized retailers. Operating margins Net margins

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 References
References

• Moneycontrol
• Mint
• The Economic Times
• Business Standard
• The Hindu BusinessLine
• IBEF
• CRISIL Research

Editors : Lakshya Bansal, Indian Institute of Management, Tiruchirappalli

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