Overview of Retail Industry

Retailing is the largest private sector industry in India and the second largest employer after
agriculture. Retail trade in India currently accounts for around 11% of GDP and employees over
8% of the total workforce.

Growth of Retail Companies in India exhibits the boom in the retail industry in India over the
years. The increase in the purchasing power of the Indian middle classes and the influx of the
foreign investments have been encouraging in the Growth of Retail Companies in India.

Growth of Retail Companies in India : Overview

Growth of Retail Companies in India is still not yet in a matured stage with great potentials
within this sector still to be explored. Apart from the retail company like Nilgiri's of Bangalore,
most of the retail companies are sections of other industries that have stepped in the retail sector
for a better business. The Growth of Retail Companies in India is most pronounced in the metro
cities of India, however the smaller towns are also not lagging behind in this. The retail
companies are not only targeting the four metros in India but also is considering the second
graded upcoming cities like Ahmedabad, Baroda, Chandigarh, Coimbatore, Cochin, Ludhiana,
Pune, Trivandrum, Simla, Gurgaon, and others. The South Indian zone have adopted the process
of shopping in the supermarkets for their daily requirements and this has also been influencing
other cities as well where many hypermarkets are coming up day to day.
Big Bazaar is planning to position itself as a value retailer after being hived off as an
independent company within the Future Group. While a new company has been floated under the
name of Future Hypermarket, the retailer is now considering a new name to represent its
discount format. Speaking to Business Line, Mr. Rajan Malhotra, Chief Executive Officer, Big
Bazaar, said, “Although we have registered a new company under the name of Future
Hypermarket, we intend changing its name. Big Bazaar is not a hypermarket and is more of a
value-for-money format and that is what the new company would stand for.”
Currently, Big Bazaar contributes 64 per cent of the Future Group’s total turnover of Rs 7,000
crore. With its standalone status as a company, Big Bazaar is expecting to drive greater
efficiencies in its back-end operations. As Mr. Malhotra says, “There would be clarity for the
concept as we become a separate company. There would be back-end efficiency in our
operations.” With amalgamation of formats under various heads ranging from Food Bazaar to
Furniture Bazaar, Big Bazaar is looking at distinguishing itself as a ‘value’ retailer in its segment
rather than being clubbed with the rest of the existing hypermarkets in the country.

Besides, it is looking forward to re-launching its private label, DJ & C, as a national brand by
giving the brand rights to Future Brands (the group vertical handling brands in the group).
Targeting the youth segment, DJ&C is today worth Rs 200 crore in Bazaar’s kitty. “We intend
re-launching it as a national brand through other retail outlets by the end of this month. We
believe Big Bazaar has moved into a mature phase and that is a compelling reason to launch our
youth brand at a national level. The DJ&C brand has crossed a turnover of Rs 200 crore and now
has enough pull to take it to its next level,” states Mr. Malhotra.

Having forged long-term relationships with a host of FMCG players through MoUs, Big Bazaar
is open to new categories being tested through its formats. “We are open to the highest selling
brands such as Pears and Dove opening the new age categories at our stores,” says Mr. Malhotra.
Meanwhile, Big Bazaar has roped in cricketer and India ODI captain Mahendra Singh Dhoni as
the brand ambassador for its extensive collection of fashion apparel.

Pantaloon Retail (India) Limited, is India's leading retailer that operates multiple retail formats in
both the value and lifestyle segment of the Indian consumer marker. Headquartered in Mumbai
(Bombay), the company operates over 7 million square feet of retail space, has over 1000 stores
across 51 cities in India and employs over 24,000 people. The company's leading formats include
Pantaloons, a chain of fashion outlets, Big Bazaar, a uniquely Indian hypermarket chain, Food
Bazaar, a supermarket chain, blends the look, touch and feel of Indian bazaars with aspects of
modern retail like choice, convenience and quality and Central, a chain of seamless destination
malls. Some of its other formats include, Depot, Shoe Factory, Brand Factory, Blue Sky, Fashion
Station, all, Top 10, bazaar and Star and Sitara. The company also operates an online portal,
futurebazaar.com.
A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town, a large-
format home solutions store, Collection i, selling home furniture products and E-Zone focused
on catering to the consumer electronics segment.

Pantaloon Retail was recently awarded the International Retailer of the Year 2007 by the
US-based National Retail Federation (NRF) and the Emerging Market Retailer of the Year
2007 at the World Retail Congress held in Barcelona.

Pantaloon Retail is the flagship company of Future Group, a business group catering to the entire
Indian consumption space. Future Group is one of the country's leading business groups present
in retail, asset management, consumer finance, insurance, retail media, retail spaces and logistics.
The group's flagship company, Pantaloon Retail (India) Limited operates over 7 million square
feet of retail space, has over 1000 stores across 51 cities in India and employs over 24,000
people. Some of its leading retail formats include, Pantaloons, Big Bazaar, Central, Food
Bazaar...

Indian Retail Market and Growth of SMEs

Source: Technopak Advisors

The retail market in India is estimated at about US$ 410 billion and constitutes about
60% of private consumption and about 35% of India's GDP. With Indian GDP expected to grow
at 7-8 % in the next coming years, the retail market is expected to touch US $860 billion by
2018. In recent years, this sector has witnessed a lot of interest from both domestic and global
players, who have committed investments worth US $30 billion, which will lead to increase in
the share of modern retail from the current 4.5% to almost 25% of the total retail market by
2018.

The Indian retail market is the fifth largest retail destination globally. The current size of the
Indian retail industry stands at $511 billion in 2008. Simultaneously, modern retail is likely to
increase its share in the total retail market to 22 per cent by 2010. Organized retail in India raked
in US$ 25.44 billion turnover in 2007-08 as against US$ 16.99 billion in 2006-07, a whopping
growth rate of 49.73 per cent (according to the Credit Rating and Information Services of India).
Organized retail has increased its share from 5 per cent of total retail sales in 2006 to 8 per cent
in 2007. It is currently around 12 per cent. India has one of the largest numbers of retail outlets in
the world. Of the 12 million retail outlets present in the country, nearly 5 million sell food and
related products.
Though the market has been dominated by unorganized players, the entry of domestic and
international organized players is set to change the scenario. Per capita retailing space is about 2
sq. ft (compared to 16 sq. ft in the U S). India's per capita retailing space is thus the lowest in the
world. Around 7% of the population in India is engaged in retailing, as compared to 20% in the
USA.
Statistically, the global retail industry is witnessing a CAGR of 5.5% is slated to grow at the
same rate till 2009. The following graph shows an overall trend of the global retail revenues.