Presentation by Shahnas A Syama K S Sobymol Devasia Sabitha Z.B


to Philip Kotler “retailing includes all the activities involved in selling goods or Services directly to final consumers for personal , Non business use”. “Every sale of Goods and Services to final consumer” – Food products, apparel, movie tickets; services from hair cutting to e-ticketing.

or retail store is any business enterprise whose sale volume comes primarily from retailing”. A retailer may be defined, as a ‘ dealer or trader who sells goods in small quantities’. Any Organization Selling to final consumer is retailing , whether they are A Manufacturer A Wholesaler A Retailer

A retailer

It does not matter how they sell or serve ( By) • • • • • Person Mail Telephone Vending Machine or Internet Or Where these are sold • A store • A street • Consumer’s House .

at the right price. when the consumer wants it.Retailing may be understood as the final step in the distribution of merchandise. at the right place. . for consumption by the end consumers. Retailers are the final business in a distribution channel that links manufacturers to consumers Indian retail industry is the second largest employer in the country with almost 12million retail stores in India. Retailers attempt to satisfy consumer needs by having the right merchandise.

Characteristics of retailing It offers direct interaction Sale volume is comparatively large in quantities Customer service Sales promotions are offered at this point only Different forms Location and layout are critical factors More employment opportunities .

Retailers Types • • • • • • Department stores Specialty stores Convenience store Discount store Off-price retailer Super store .

Functions of Retailing
• • • • • •

Sorting Breaking Bulk Holding stock Communications Assist small suppliers Customer service


Indian retail sector is highly fragmented with more than 90 per cent of its business being carried out by traditional family run small stores. This provides immense opportunity for large scale retailers to set-up their operations – a slew of organized retail formats like departmental stores, hypermarkets, supermarkets and specialty stores are swiftly replacing the traditional formats dramatically altering the


is the third-most attractive retail market for global retailers among the 30 largest emerging markets, according to US consulting group AT Kearney’s report published in June 2010

.96 billion in 2011 to US$ 785.RETAIL-MARKET SIZE The total retail sales in India will grow from US$ 395.12 billion by 2015 Indian retail sector accounts for 22 per cent of the country's gross domestic product (GDP) and contributes to 8 per cent of the total employment.

Evolution of Indian retail Historic/Rural Reach Traditional/Pervasi ve Reach Government Supported Modern Formats/ International Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls PDS Outlets Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas Weekly Markets Village Fairs Melas Source of Entertainmen t Availability/ Low Costs / Distribution Neighborhood Stores/Convenie nce Shopping Experience/Efficie ncy .

the end- . The greater availability of personal credit and a growing vehicle population providing improved mobility also contribute to a trend towards annual retail sales growth of 12.2 per cent.REASONS FOR THE GROWTH Robust economic growth High disposable income with consumer Rapid construction of organized retail infrastructure are key factors behind the forecast growth. Expansion in middle and upper class consumer base Growth potential in India’s tier-II and tier-III cities as well.

2% 5.0% 9.8% 2 00 0 2 00 3 2 00 6 Source :Central Statistical Organization (CS0) Projections of 8% sustainable real GDP growth rate till 2020 promise high growth potential for Indian Retail… 2 00 7 1 99 7 1 99 8 1 99 9 2 00 1 2 00 2 2 00 4 2 00 5 0% .2% 8.4% 6.90% 8% 7% 6% 5% 4% 3% 2% 1 % 5.6% 5.0% 6.0% 6.6% 6.Indian Retail – Buoyed by high GDP growth 10% 9% Real Growth Rate 9.4% 6.

India Experiencing Rapid Economic Growth Real Growth Rate GDP (US$ bn) 9.4% growth rate makes India the second fastest growing economy in the world .

% Increase in growth over the previous year Led by Growth in Services Sector 107% 120% 100% 80% 55% 2005-06 37% 21% 20% 0% Tourist Arrivals Passenger Cars Sales Commercial Vehicle Sales Domestic Air Passengers New Cell Phone Connections 13% 14% 6% 7% 21% 41% 2006-07 60% 40% Services sector adding to GDP in a significant manner .

300 million Afford goods like Refrigerators .g. radios . bicycles .Driven from Consumption Throughout the 1. Scooters & Colour TVs 600-700 million (Generally Rural) Afford simple industrial products e. Private Healthcare & Foreign travel 250 .1 Billion Population 5-7 million Super Rich 70 – 80 million Afford Cars. . textiles Poverty Line = income less than $ 1/day 60 % of India’s population are under 24 years Source: McKinsey.

100 towns) US$ 154 Billion (45%) Modern retail – US$ 12 billion 8% of urban retail spends Rural (6.86 Rs.000 villages) US$ 188 Billion (55%) Modern retail Negligible .27. Private Consumption US$ 580 Billion (62%) Public Spending and Capital Formation US$ 355 Billion (38%) Transport Communicati on Recreation Cultural Services Education Rent Utilities Other Services Retail US$ 342 Billion (59%) Non Retail US$ 238 Billion (41%) Urban (5.With High Private Consumption GDP US$ 935 billion Food Apparel Beverages Footwear Consumer durables Appliances Stationery Kitchen utensils Furniture Furnishings Sports goods Health & Beauty Personal Care Jewellery Timing Source: Central Statistical Organization (CS0) and Technopak Analysis Conversion rate: 1 US$ = 40.

5%) Modern retail – US$ 9 billion 3% of rural retail spends All figures are in nominal terms after taking into account inflation Source: Technopak Analysis .5%) Modern retail – US$ 78 billion 31% of urban retail spends Rural US$ 278 Billion (52.450 billion Private Consumption US$ 870 Billion (60%) Public Spending and Capital Formation US$ 580 Billion (40%) Retail US$ 530 Billion (61%) Non Retail US$ 340 Billion (39%) Urban US$ 252 Billion (47.About US $530 Billion Retail Market by 2012 GDP* US$ 1.

Which Makes Indian Retail an Attractive Market India tops the Global Retail Development Index May 7. 2013 .

Rapid urbanization. a big change from the traditional plethora of unorganized family-owned businesses. changes in shopping pattern. demographic dividend and pro-active measures by the Government are abetting the . has been increasingly leaning towards organized retailing formats.ORGANISED v/s UNORGANISED The Indian retail market. The pattern in domestic retailing is altering in the favor of organized modern retailing. over the last decade.

Besides. Chennai. Kolkata. the organised retail real estate stock will grow from the existing 41 million sq ft to 95 million sq ft. Organised retail in India is expected to increase from 5 per cent of the total market in 2008 to 14 . national capital region (NCR). during 2010-12 around 55 million square feet (sq ft) of retail space will be ready in Mumbai. Hyderabad and Pune.18 per cent of the total retail market and reach US$ 450 billion by 2015  According to a report titled 'India Organised Retail Market 2010'. Bengaluru. between 2010 and 2012. food retail sector in India is set to be more than . published by Knight Frank India.  Driven by the growth of organised retail coupled with changing consumer habits.

Music & Gifts Home INR 28.Organized Retailing in India (2006) Organized retail Clothing.000 crore 39% 9% 7% 3% 2% 18% 13% 3% 3% . Textiles &Fashion accessories Footwear Jewellery & Watches Mobile handsets & accessories Health & Beauty (including services) Food & Grocery Durables Books.



2013 .Modern Retail – Organized Channels • The share of organized retail is less than 3% of the total retail market • The size of modern retail is about US$ 8 Billion and has grown by 35% CAGR in last five years 100% 80% 55% 60% 40% 20% 0% US Taiwan Malaysia Thailand Brazil Indonesia Poland China 85% 81% 40% 36% 30% 20% 20% 3% India Traditional Channel Modern Channel May 7.

. 2013 .. but Rapid Transformation is Anticipated Current Size & Future Projections for Indian Retail Market 900 800 700 600 500 400 300 200 100 0 800 US$ Billion 342 373 408 445 486 530 200 12 2007 18 2008 26 2009 Total Retail 39 2010 59 2011 Organized Retail 87 2012 2017 And may reach a share of 25% by 2017 May 7.

RECENT TRENDS May 7. 2013 .

2013 .May 7.

Bombay Bazaar and Efoodmart formed which are aggregations of Kiranas. Rural bias: Nearly two thirds of the stores are located in rural areas. Though India has the highest number of retail outlets per capita in the world. 2013 . Rural retail industry has typically two forms: "Haats" and “Melas". Haats are the weekly markets : serve groups of 10-50 villages and sell day-to-day necessities. Unorganized retailing is getting organized: To meet the challenges of organized retailing such as large Cineplex's. Bombay Bazaar.Recent Trends Traditionally three factors have plagued the retail industry: Recent changes: Unorganized : Vast majority of the twelve million stores are small "father and son" outlets Fragmented : Mostly small individually owned businesses. Stores trying to emulate the model of Wal-Mart.q. ft.q. 25 stores in Delhi under the banner of Provision mart are joining hands to combine monthly buying. RPGs. May 7. which are backed by the corporate house such as 'Ansals' and 'PVR‘ the unorganized sector is getting organized. Ex. Research shows that the chances of senses dictating sales are upto 10-15%. the retail space per capita at 2 s. sub-urban discount stores. Big Bazaar. average size of outlet equals 50 s. Piramyd and Globus are laying major emphasis & investing heavily in store design. and malls. Melas are larger in size and more sophisticated in terms of the goods sold (like TVs) Experimentation with formats: Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out. Retail chains like MusicWorld. Quasi-mall. Ex. ft per person is amongst the lowest. Cash and carry etc. Emergence of discount stores: They are expected to spearhead the organized retailing revolution. Baristas. Store design : Biggest challenge for organized retailing to create a “customer-pull” environment that increases the amount of impulse shopping.

2013 .Retail Market not limited to metros but widely across India • The classic ”skimming” strategy in the metros is not longer sufficient – 100 cities strategy • Over 250 large size shopping malls are currently under construction • Leading cities 2030 are forecasted to be – Mumbai – New Delhi Ahamabad Vadodara – Chandigarh Ludhiana New Delhi Lucknow Varanasi Patna Jaipur Kanpur Indore Bhopal Nagpur Pune Hyderabad Visakhapatnam Kolkata Surat Mumbai Bangalore Chennai Kochin Coimbatore Madurai Above 10 Mn inhabitants Above 4 Mn inhabitants Above 2 Mn inhabitants Above 1 Mn inhabitants May 7.

Maharashtra. which includes what kind of crop can they plant and when. along .RURAL RETAILING AADHAR Future Group and Godrej Agrovet's joint venture (JV) in rural retailing. The company also provides farmers with solutions to problems regarding their agricultural output. The alliance operates stores in Gujarat. Haryana and Punjab and mainly sells wheat and paddy apart from daily need products. is all set for a revamp. 'Aadhar'.

Champion Agro Ltd Rajkot based Champion Agro Ltd is planning to come up with single window shopping facility for farmers.  It will open 50 new outlets by the end of 2011with an investment of US$ 3. and is expected to open around 400 outlets at a taluka level across Gujarat by 2016. The company already has 35 agriretailing outlets in the Saurashtra region. The overall .3 million.

Of these. micronutrients.May 2011. . fertilisers.ACIL Cotton Industries Vadodara based ACIL Cotton Industries is all set to come up with around 40 outlets of 'ACIL Krishi Store' in Gujarat. As for 2011. fungicides. ACIL has decided to focus on the Gujarat market. four outlets got operational in April . ACIL stores will sell all types of seeds.

with mapped routes. The company gave these GPSenabled phones to 120 of its field representatives.OTHER VENTURES Marico is using mobile technology innovatively to arm its field representatives in their procurement process. . The IT team at Marico developed a mobile-based application for Nokia 5235 series handsets.

nearest distributors available.000 outlets in a year’s time. It has been able to reach to 500. The name of the village. all of this was mapped. HUL. whether it has a school. According to Nitin Paranjape.Hindustan Unilever Ltd (HUL) is experimenting with tablet PCs in its attempt to increase its rural reach. its total strength. “We put all the villages on an IT map. We used this information to determine the opportunity the village presented to . a hospital. a primary health centre. managing director.

household articles. household articles. electronics & appliances. FMCG. household articles.Global Heavyweights in Indian Retailing Joint Ventures Product Range Bharti-Walmart (with $2. furniture & furnishing. clothing & footwear. furniture & furnishing. furniture & furnishing. apparel and electronics Hypermarkets Retail Formats Hypermarkets.5 Billion investment by Bharti) Carrefour-Landmark Food & grocery. clothing & footwear. Cash and carry Multi format and Multi Category Birla Convenience and Supermarket . electronics & appliances. Argos will be providing its brand. Food & grocery. clothing & footwear. Supermarkets and Convenience Home Retail Group plc Shopper's Stop Ltd and Hypercity Retail India Private Ltd Tata-Woolworths Franchising the Argos concept under the terms of the arrangement. electronics & appliances. catalogue and multi-channel expertise and IT support Sourcing agreement for Consumer durables and Foods under brand name CROMA Multi Channel propositions Multi brand retail chain Staples Inc – Pantaloon Retail Reliance Global Sourcing of Office equipments across various businesses Food & grocery. Food and groceries.

there is restriction on sale to individuals. which most foreign retailers use. Under single-brand retailing a store can stock goods that have the same brand. These stores are only permitted to sell to outfits such as restaurants and kirana stores . the government allows 51% foreign direct investment in a single-brand retail venture while 100% is permitted in wholesale cash-and-carry.FDI in Retail At present. In the wholesale cash-andcarry route.

69 million. stood at US$ 66. in single-brand retail trading. according to the Department of Industrial Policy and Promotion (DIPP). .FDI in Retail Foreign direct investment (FDI) inflows between April 2000 and December 2010.

FDI in Multi Brand Retailing India's multi-brand retail sector.000 crore) according to a Boston Consulting Group (BCG) study. The government is likely to permit foreign direct investment (FDI) in the multi-brand retail sector from April 2012. is estimated to be worth $28 billion (Rs 125. .

April 2012. One of the major outcome of the discussion is raising 49% to 51%. .e. which says 49 per cent FDI in multi-brand retail will be allowed in a phased manner which will be effective from the next financial year i. The Committee of Secretaries (CoS) headed by Cabinet secretary Ajit Kumar Seth met on July 22 to finalise the blueprint of the proposal for political clearance.The government prepared a draft in July 2011.

According to the the economic advisor to the Prime Minister. for prospective entrants. The draft has laid out strict norms such as earmarking 40 per cent investment for backend infrastructure. In the second phase other metros like Bangalore. foreign multibrand retail chains will be allowed in the metros Delhi. Kolkata and Chennai. Kaushik Basu . Hyderabad and Pune will be included. the government will allow FDI in three phases. In the first phase. such as cold storage. . soil testing labs and seed farming. Mumbai.

and Paris-based Carrefour SA to open their retail stores through strategic partnerships. representing . Arkansasbased Wal-Mart Stores Inc. According to Business Monitor International.The move has paved the muchrequired way for international retailer like Bentonville. retail sales in India may jump from $396 billion in 2011 to $785 billion in 2015.

to harm self-employment opportunities adversely affect the manufacturing sector harm small traders across the country. .

consumers will soon more options to choose products more and more investment in the backend Improve the standard of efficiency of supply chain management. .

CEO and Country Head of CapitaMalls Asia. this money would be used to develop seven more malls in . Mr Kevin Chee. has said that apart from funding the two malls that are operational now. has pledged US$ 400 million to its growth in India up till 2014. owns and manages malls across Asia. which develops.Latest Information on Indian Retail Scenario Singapore-based CapitaMalls Asia.

the first one to be opened by August 2011.Reliance Retail will enter the cash and carry market with "Reliance Market" in Ahmedabad. .

.02 million. including debt and preference shares. Pril dish cleaners and Fa deodorant. 97 per cent stake in its Indian subsidiary for US$ 137.Ujala fabric whitener maker Jyothy Laboratories has bought Henkel AG's 50. and rights to the multinational's future launches. the two companies revealed. The deal includes Henkel's entire portfolio that includes Henko and Chek detergents.

. The store in Vadodara is the company's eighth in the country after seven stores in Andhra Pradesh. denim major Arvind Ltd. is looking at 100 stores by the end of the financial year 2011-12.With the launch of its first 'Arvind Experience Store' in Gujarat at Vadodara.

.Quick food service restaurant chain Subway will set up 45 outlets across the country by 2011-12 entailing an investment of around US$ 9 million. The company has now 205 outlets in India and plans to take its count to 250 by the end of 2011-12.

.Max Hypermarkets. the food retailing chain of the Dubai-based Landmark Group is investing US$ 122.14 million for its store expansion business across 30 cities in India.

Retail . who sits on the . said Kaushik Basu. Allowing foreign investment in multi-brand retail may help moderate food prices. paving the way for companies such as Wal-Mart Stores and Carrefour to open stores. according to Junior Trade Minister Jyotiraditya Scindia. A government panel has issued a report that recommends easing a law that prohibits non-Indian companies from operating multi-brand outlets.Government Initiatives India will announce new rules for foreign investment in retail by April 2012. chief economic adviser in the finance ministry.

The changes are part of the third revision of the Consolidated FDI Policy. . the foreign company will not have to seek a no-objection certificate (NOC) from the Indian partner for investing in the sector where the joint venture operates. the government has eased norms for investments by foreign companies that are present in India through a joint venture (JV) or a technical collaboration.  The government has also relaxed norms for downstream investments and convertible instruments.  In a landmark decision. Now. India currently allows 51 per cent FDI in singlebrand retail and 100 per cent in wholesale cashand-carry operations. giving foreign companies more powers.


a large number of customers are not willing to pay a premium for the shopping experience promised by large format retailers. .THE KIRANA       CRM practice Known about the customer’s families Credit and home delivery Consumer familiarity runs from generation to generation Open longer hours and stock most of the goods Consequently.

HIGH COSTS FOR THE ORGANIZED SECTOR High expenses to organized sector . The lease cost up to 6-10 percent of sales Manpower cost is lower at 5-6 percent of sales Capital costs are more in retail business due to major renovations needed every 5-7 .

improvements in road networks.Organizing Retail in India-Challenges  Heterogeneous market ◦ Product offerings in different stores across the country will be very different ◦ No standard mode of operation across formats ◦ Market not mature (has to be validated)  Infrastructure will bring about logistical challenges ◦ Though. are expanding and building on logistics and technology . power supply are underway Retail Challenges  Trained employees with understanding of retail business are inadequate compared to the needs of organized retail Barriers to Entry ◦ High taxes. bureaucratic clearance process and labour laws   High cost of real estate ◦ though over 600 malls are to come up all over the country by the next 4 years  Indian retailers are deeply entrenched.

Processes Processes Consumer Consumer • Complex Processes .Multiple MRP. 250+ festivals • Supply chain not reliable. Forecasting & Replenishment. Deals & Promotions. 100+ religion. flow through warehouse • Evolving processes in Supply chain & merchandising • Global Best Practices not adopted • High disposable income • Changing consumer preferences • 28 states. Cold storage infrastructure evolving • Outsourced transportation • Low level automation in warehouses • Little or no collaboration between vendor & retailer • Low fill rates from vendors • Highly localized assortments leading to relationship with multiple vendors • Complex trading contracts and off invoice discounts • Multiplicity of disparate Systems & Data Formats • No architecture roadmap • Base ERP and home grown POS solutions. Low investments in store systems • No investments in planning & optimization technologies Infrastruct Infrastruct ure ure Supplier/ Supplier/ Vendor Vendor Current Current IT IT . Lean supply chain – JIT inventory.

This affects growth and expansion plans The high cost of real estate:  Real estate price in some cities in India are amongst the highest in the world. hamper the development of food and fresh grocery retail in india. lack of a cold chain infrastructure.Challenges contd. Lack of adequate infrastructure  Poor roads . etc . Weakness of Player  Retail not being recognized as an industry in india.  The lack of recognition as an industry hampers the availability of finance to the existing and new players. high lease rentals eat into the profitability of a project.  The existing supermarkets and food retailers have to invest a substantial amout of money and time in building a cold chain network.  The lease or rent of the property is one of the major areas of expenditure. ..

Purchasing power of money  As the Indian population mostly consist of middle class families and low wages worker they don't want to go in the super market or retail market . Foreign direct investment: The fact that foreign direct investment(FDI)is not permitted in pure retailing is seen as one of the prime reasons for the slow growth of retail in India.Multiple and complex taxation system  The sales tax rates very from state to state while organised players have to face a multiple point control and tax system.  A global retailer can enter India only by way of a franchise with an Indian partner or through technological alliances.there is considerable expense to transfer good from one store to another.

retailers. investors and malls Improved Infrastructure In view of a compressed evolution cycle. Execution and efficiency       . franchisees.The Way Ahead  India is amongst the least saturated of all major global markets in terms of penetration of modern retailing formats Many strong regional and national players emerging across formats and product categories Most of these players are now gearing up to expand rapidly after having gone through their respective learning curves Real Estate Developers are also moving fast through the learning curve to provide qualitative environment for the consumers The Shopping Mall formats are fast evolving Partnering among Brands. retailers need to simultaneously address issues of speed.

Key Challenges Key Key Challenges Challenges to to overcome overcome Internal • Attracting & retaining qualified manpower • Implementing SOP’s & best practices • Focus on improving operational efficiency • Cost control • CRM & Service levels External • High real estate cost • Anarchic laws • Shortage of qualified manpower • Poor infrastructure • Unorganized & poor supply chain .

and an efficient supply chain  Manpower • • Potential tie-ups with universities and setting up dedicated retail institutes Utilize experience of international retailers to train local talent Large Rural market .Key Opportunities  Supply Chain Investments • • Setting up logistics and supply chain infrastructure Import of know how and logistics techniques from developed retail countries  IT Infrastructure • IT is the enabler behind communication. collaboration with suppliers.

driving large investments into the country. The industry is also slated to be a . huge markets and availability of raw materials at comparatively cheaper costs are expected to make India lead one of the world’s best retail economies by 2042.RETAIL – ROAD AHEAD There is a huge untapped opportunity in the retail sector. thus having immense scope for new entrants. A good talent pool.

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