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INDIAN RETAIL INDUSTRY

The India retail market is estimated at US$ 470 Bn in 2011, accounting for ~35% of GDP and is expected to grow to US$ 675 Bn by 2016, @ CAGR of 7.5% The organized retail market is estimated at US$ 26 Bn and accounts for ~6% of the overall retail market for 2011. The organized retail market is projected to grow to US$ 84 Bn by 2016, @CAGR of 26% At 35%, Food & Grocery has the highest share of organized retail . Food & Grocery along with Apparel, Jewellery & Watches and Consumer Electronics & IT accounts for ~80% of the organized retail market in India in 2011. For the top 8 retail categories ~50% of the retail stores are present in top 25 cities

SEGMENT WISE ORGANIZED RETAIL MARKET

RELIANCE RETAIL
Entry through a tie-up with Sahakari Bhandar, Mumbai Its first foray into Organized Retail was in Nov 2006 with Reliance Fresh Reliance Fresh Reliance Fresh follows Farm-to-Fork Model It has items like fruits & vegetables, grocery, bakery, dairy, personal care etc.

Private label Reliance Select The store was successful in initial years but later was subjected to protests from local traders Reliance Fuel Ventured into retailing of fuel through franchised petrol bunks in 2006 Good quality product and services were offered

Reliance Digital Started in April 2007 Tie-up with Apple and opened iStores Tie-up with Reva electric car company Reconnect- Private label launched in Oct 2011 Competition from e-zone, Tatas Croma, Next stores Reliance Trends Specialty chain with Apparels, Luggage and accessories Offers International brands in lifestyle segment Own private labels and national brands in value segment

Reliance Footprint 20:80 Private label to other domestic and international brands Major Players-Bata, Woodlands, Reebok etc. Reliance Jewels Collection from Kolkata, Rajkot, Amritsar etc. Reliance Timeout Area of 21,000sft Offers books, toys, music etc. with an Instore Coffee shop Major Players- Future Groupss Depot, RPGs Books&Beyond and K Rahejas Crossword

Reliance Delight Non vegetarian retail outlet offering fresh fish and frozen meat Delivers margins up to 20% Less number of organized players Contributes to 10% of overall revenue to RRL Reliance Auto zone Engages in sales and service of accessories for two and four wheelers Typical store with 6500 s.ft space

Reliance Wellness Medicines in Allopathic, Homeopathy and Ayurveda Tie-up with ICICI Lombard for health insurance Competitors- Future Groups Fit and healthy, RPGs Health and glow Plans to achieve INR 6000Crore target by 2011

ITC RETAIL

ITCS RETAIL VENTURE


Change of image from cigarette to socially responsible company, a value driven conglomerate Chairman Yogesh Chandra Deveshwar was confident of doing well on entering retailing ITC forayed into lifestyle retailing, branded packaged foods, personal care products etc. ITCs Lifestyle Retailing Business Division (LRBD) grew swiftly and won awards in retailing

CONTD

Awards provided the impetus for a new chain attempting to achieve its target audience
Retailer

of the year 2008 by Asian Retail Congress Best Supply Chain Practices 2006 by Retailers Association of India with ITWSignode

ITCs line of business included FMCG, Hotels, IT, Paperboard, Agribusiness

AGRI-RETAIL IN URBAN AND RURAL AREAS


First company to exploit the recognize and tap the needs of rural people Initiative aimed at

empowering

small and marginal farmers overcoming inhibitions of poor farming and risk taking

Sanchalaks enabled farmers to gain information on weather and market prices

CONTD
ITCs agribusiness division, conceived EChoupal as a more back end integrated supply chain Also forayed into rural marketing mall called Choupal Sagar Spent Rs.4 crs on setting up and receives nearly Rs.3 crs per annum Plans to expand came to a halt due to financial crisis and economic slowdown

CONTD

Entry into urban markets with Choupal Fresh sourcing merchandise directly from farmers via EChoupal Started operations only in metros and plans to expand Emphasis on improving quality and productivity of domestic horticulture products through ITCs good agricultural practice Combine wholesale with retail Future groups Pantaloon retail entered into a strategic tie-up with Choupal Fresh for its Fresh and Pure section in Food Bazaar

BARRIERS AND RESPONSES TO EXPANSION


Conglomerate model was gaining momentum but recession and higher rentals reduced its pace Wills lifestyle showrooms had to shut down due to decrease in sales Customer-centric activities required to increase the decreasing sales Confidence of the chairman

FUTURE GROUP RETAIL

Incorporated as apparel retailer Manz Wear Forayed into retailing mainstream in 1997 with its 8000 sq ft retail showroom Pantaloon launched big format retail centres like Big Bazaar and Central with 1500020000 and 200,000 sq ft space respectively. Named as Future Group in 2006 and its retail arm was renamed as Pantaloon Retail (India) Limited.

Pantaloon retail has presence in various sectors of retail in multiple formats Based on value for money psyche of indian middle class Turnover surged from Rs. 285.3 Cr in 2002 to Rs. 5048.9 Cr in 2008 PAT jumped from Rs. 7 Cr. To Rs. 126 Cr Market capitalization increased from 60 Cr to 3737.8 Cr.

BUSINESS MODEL SUSTAINABILITY


It was planned to restructure the company and rename it as Future markets and consumer Division A holding company with two subsidiaries- Future Value Retail (Fashion Brands) and Future Specialty Retail (Supermarket Chains) Postponed due to expectations of new FDI policy of the government Has ambitious plans once 100% FDI is allowed in multi-brand retail

BUSINESS CONVERGE, BUT BUSINESS MODELS DIVERGE


Model that extends services to value based customers Biyanis Future Group Big Bazar is targeting the middle and lower income strata alike ITC is working towards an image in lifestyle segment Future Group diversified into Future Capital holdings, logistics, and Pantaloon Retail ITC expanded into agribusiness and lifestyle retailing

WHAT IS RETAILING ALL ABOUT?


It is not about reselling things in a shop Decisions of make or buy, in house or outsource are critical ones Right mix of manufacturing products and outsourcing of processes is important

ITC Model It does not have manufacturing facilities Instead outsources the production of all its merchandise Apparel designs are made in association with ADIG( American Design Intelligence Group), US based firm Hired its own set of designers 100% Outsourcing

Practices concepts like JIT Production, FTL(Full truck load) and RDC(Regional Distribution Centers) Replenishes stock within 24 hours in major markets and 48 hours all over India Strong presence comes from cottage and SMEs Notebooks outsourced from Tamil Nadu Agarbattis are made in association with Sri Aurobindo Ashram HACCP Certified(Hazard analysis and critical control points)

Future Group Model Value based volume business 98 Big bazaar outlets(2009), 214 ( As of June 2012)
Source: Wikipedia

Reseller that sources products in bulk Purchased 70% of Adhaar which will exploit rural retailing chances In-house brands- Koryo and Sensei Private labels are sourced from China It has centers in Hong Kong and China Backward integration helped in maintaining its bottom line Has its own supply chain arm, FLSL which also serves external business parties

Reliance Model Tie-up with ITC Choupal, Dole and Chiquito for supply of fruits and vegetables Rural sourcing hubs in WB, HP, Uttaranchal Source televisions from Videocon to introduce private labels For Reliance Wellness, deal with Cipla Tie up with 37 manufacturing partners for Jewellery To resolve supply chain issues, Reliance made a tie up with UK based supply chain major

WHO WILL WIN?


With innumerable retailers, ITC has a chance to win RRL is relying on its Stand alone specialty stores through retail conglomerate model Future Group proved its success but recession has dimmed its store-in-store formats and malls

Decrease in footfalls and reducing profits Three retailers planning to sell their private merchandise through Kirana Stores FDI in multi-brand retail may bring a new hope to the current scenario But, Only time would tell!!!