Retail Sector Analysis
Presented by:
Somesh
Borse
Shaikh Moin
The NIS Academy, Aurangabad
INTRODUCTION
‘Retaillier’- meaning ‘to break the bulk’
Involves direct interface with the customer
Retail industry : sales of $7.2 trillion worldwide
Every 10th billionaire in the world is a retailer
RETAIL SECTOR
ORGANISED SECTOR UNORGANISED SECTOR
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Indian Retail Scenario
• Total Private Consumption Expenditure in India – 450 Billion USD
• Retail Sale – 215 Billion USD (55%)
• Organized Retail – 11 Billion USD (3%)
• Retailing – 35% of GDP
• Outlet Estimates – Over 12 Million
• Format – Only 4% larger than 500 [Link].
• Second Largest Employer after Agriculture(8%)
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RETAIL SECTOR IN INDIA
ORGANISED UNORGANISED
RETAILING RETAILING
At present Rs 55000 crore
market Accounts for almost 97%
of the retail sector
Projected growth at 25%-30%
per annum
Dominated by traditional
Contribution to total retailing
forms of retailing
sales likely to rise to 9% by 2010
Commonly known as
mom & pop stores
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I ndian Retail I ndustry Size
US Dollars in
Billions
300
250
200
5
25
5
4
24
23
150
4
4
22
21
4
4
20
19
100
50
6 8 11 14 18 23 29
0
2004 2006 2008E 2010E
Source: The Marketing Whitebook 2006
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Indian Retail
Entities established prior to 1997 -
Allowed to continue with their existing foreign
equity components.
No FDI restrictions in the retail sector pre-1997
(Foodworld )
51:49 JV between RPG and Dairy Farm
International
Leading food retailer in India now
(Mc Donalds)
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RETAIL FORMATS IN INDIA
MODERN RETAIL FORMAT
Department stores (Shopper’s Stop)
Hyper-markets (Big Bazaar)
Branded Stores (Allen Solly)
Specialty stores (Planet M)
Super-markets (Foodworld)
Discount stores (Subhiksha)
Entertainment (Inox)
TRADITIONAL RETAIL FORMAT
Corner kirana store
Weekly haats
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Street markets
Indian Scenario
Demographics
Population : 1105 mn
Population Growth : 1.6%
Median Age : 25 years
Urban Population : 29%
GDP Per capita (approx) : US$ 750
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Souce KSA Technopak 2005
Potential of Retail in India
• At 271 million, one of the largest consuming base in the world, forming
27% of the total population
• A high spending community below 45 years comprises 81 percent of the
population
• Increased literacy from 44% in 1965 to 70% in 2003.
• Increase in media penetration to 38-million cable-TV households and 80-
million TV households in 2001.
• In spite of all the above factors organized retail stands at 2-3 per cent in
India compared to 85% in USA, 40% in Thailand, 55% in Malaysia and
20% in China
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FDI ..
• 51% FDI allowed in single brand retailing
• Opening up of certain retail sectors for
foreign direct investment (FDI).
• The four sectors are electronic goods,
Office equipments & stationery, sports
goods, and building equipment.
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Modern retail Formats
3% 2%
3% 3%
4% 3%
38%
7%
8% 9%
9% 11%
Clothing Textile & Fashion accessories Food & Grocery
Footwear Consumer Durables
Furniture Books & Catering Services
Watches Health & Beauty
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Mobile Phones
MAJOR PLAYERS IN INDIA
PROMOTERS BRANDS
RPG Food World
PRIL Pantaloons,
Big Bazaar
Tata Grp Westside, Trent, CCD
[Link] Shopper’s Stop
[Link] Globus
ITC Wills Life Style
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Key Drivers of Retail Sector
• Supply chain
• Increase in income
• Working women
• Customer analysis
• Work force
• Demand for global brands
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Strengths
• Recognition as an industry.
• India tops the annual list of most attractive
countries for international retail expansion
• Growing disposable income of the urban Indian
consumer.
• Availability of manpower.
• Technology-intensive industry.
• Least saturated of all global markets studied.
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Weakness
• Fast changing needs of consumer
• FDI norms
• LAND & PROPERTY
Gap between supply and demand
Only Indians can own property in India
High stamp duty on property
Lease alone costs 6%-10% of sales
LABOUR LAWS
Restricted working hours
Hiring part-time workers difficult
TAXES
High corporation tax
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Opportunities
• India is amongst the least saturated of all major global markets in
terms of penetration of modern retailing formats
• Players emerging across formats and product categories
• Rapid Expansion for all players
• The Shopping Mall formats are fast evolving
• Partnering among Brands, retailers, franchisees, investors and malls
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Threats
• Barriers to FDI which limits entry of global
players and limits exposure to best
international practices
• Poor Infrastructure which restricts retail
growth, creates supply chain bottlenecks
and increases wastage of farm produce
• 2008’s economic crisis create some bad
effect on sector.
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Pantaloons
India’s LARGEST Retailer
• 99 Outlets
• 25 Cities
• 3 mn Sq. ft. Retail Space
• 12,000 Employes
• 8,000 Customers a day
• Targeted sales of Rs. 9000 Crore and
30mn sq ft space by 2010.
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Shoppers’ Stop
• 20 Large Departmental Stores
• About 1 mn sq. ft. Retail Space
• 2,400 Employes.
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Reliance
• Rs. 30,000 cr ($ 6.67 bn) investment
• expected sales of Rs. 90,000+ cr ($ 20 bn)
by 2009-10
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RPG
• Planning IPO,
• 450+ MusicWorld,
• 50+ Spencer's Hyper covering 4 mn sq ft
by 2010
• Lifestyle : Rs. 450+ cr ($ 90 mn)
investment in next 5 years to expand on
Max Hypermarkets & value retail stores,
Home & Lifestyle Centres.
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Subhiksha
• 750 stores
• Rs. 650+ cr ($ 145 mn) sales by March
2007
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Vishal Group
• Plans include an IPO
• investment close to Rs. 1250 cr ($ 278
mn) by 2010,
• targeting 220 outlets, taking its cumulative
retail space to 5 mn sq ft and sales
turnover of Rs. 5000 cr ($ 1 bn+).
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Bharati Group
• Plans Rs. 31,500 cr (US$ 7 bn)
investment in creating retail network in the
country including 100 hypermalls
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Foreign Players
• Metro AG and Shoprite already operating
• Tesco and Carrefour expected to operate soon
• Wal-Mart has already sined a JV with the Bharti Group
• Woolworths (Dick Smith Electronics - durable retail arm)
recently started their operations through a JV with Tatas
with plans to open 60 Croma stores by 2009.
• French retailer Geant is also expected to begin
operations in India soon.
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Conclusion
The new culture of superstores & malls has changed the way
business is done.
Royal treatment for the customers.
Retail transformation has already started bringing in larger
interest from International Brands / formats.
2008’s Economic crisis find out new ideas in the sector.
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Hierarchy in Retail
Higher Positions
Corporate, Zonal and Regional Positions
Mid Level Positions
Store Manager, Asst. Stores Manager, Floor
Supervisors, Team Leaders, Visual
Merchandisers, In-store Marketing
Present Opportunities
Frontline Sales, Customer Service
Associates, Backhand operations
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Thank You…
?
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