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Retailing in India

FAST FACTS -

14 to 15 % of GDP.
Indian retail market is approx US $ 450 billion
One of the top 5 retail markets in world.
Employment to about 40 million Indians
(3.3% of Indian population).
Increasing purchasing power of consumers
is creating large market opportunities.
The Indian Retail Market

Over 90% of trade conducted through


independent local stores.
Presence of geographically dispersed
population, complex distribution network,
Little use of IT systems,
Limitations of mass media and
Existence of counterfeit goods.
Types of formats

Organized Unorganized
Trading activities by Traditional formats
licensed retailers of low-cost retailing
(registered for sales The local mom and
tax, income tax, etc.)
pop store,
Supermarkets , paan/beedi shops,
hypermarkets and convenience
retail chains, and also stores, hand cart
privately owned large and pavement
retail businesses. vendors, etc.
Growth
Growth over 1997-2010
India in 1997 allowed foreign direct investment (FDI) in cash and
carry wholesale. For eg :Best Price by walmart and bharti
enterprise.

Between 2000 to 2010, Indian retail attracted about $1.8 billion in


foreign direct investment.

India has topped the Global Retail Development Index (GRDI) (for 3
consecutive years).
Indian retail industry registered a continuous but limited growth .
Growth

In 2011 Indian retail industry generated sales of


about $470 billion, out of which approx 5.7%
came from organized retail.
Opening of retail industry(2012) FDI on single-
brand retailer, with greater than 51% foreign
ownership.
The Economist forecasts that Indian retail will
nearly double in economic value by 2020
(expanding by about $400 billion).
Major Indian retailers

4 major Retail groups in India :


Reliance Industries Ltd,

Aditya Birla Group,

Bharti Enterprises Ltd &


Mahindra Group
Other prevalent organized retailers :
Future Groups- Big Bazaar, Food Bazaar,

Pantaloons, Central, Fashion Station, Brand


Factory, E-Zone etc.
Raymond Ltd - Textiles, The Raymond Shop, Park

Avenue, Park Avenue Woman, Parx, Colourplus


Fabindia

RP Sanjiv Goenka Group - Spencers

The Tata Group - Westside, Star India Bazaar,

Landmark, Titan , Tanishq , Croma.


REI AGRO LTD - 6TEN
Foreign players in India

Wal-Mart & Bharti Enterprises -


planning to open 10 to 15 cash-and-
carry facilities over seven years.
Carrefour (the worlds second largest).

Tesco with Tata group Star bazar

Indian players -Arvind Brands, Madura

Garments, Spykar Lifestyle & Royal


Classic Polo plans to capture foreign
market.
Challenges faced by Indian retail industry

Automatic approval is not allowed for


foreign investment in retail.
Regulations restricting real estate
purchases and cumbersome local laws.
Taxation, which favors small retail
businesses.
Absence of developed supply chain and
integrated IT management.
Challenges faced by indian retail industry

Lack of trained work force


Low labour productivity
Low skill level for retail management
Lack of Retail Courses and study options
Rapid price changes
Constant threat of product obsolescence
and
Low margins
Retail reforms- 24 November 2011

India will allow foreign groups to own up to 51 per

cent in multi-brand retailers.

Single brand retailers, such as Apple and Ikea,


can own 100 percent of their Indian stores, (up
from the previous cap of 51 percent);
Both multi-brand and single brand stores will have

to source a third of their goods from small


and medium-sized Indian suppliers;
Both multi-brand and single brand stores must

confine their operations to 53-odd cities with a


population over one million, out of some 7935
towns and cities in India.
Retail reforms- 24
November 2011
Multi-brand retailers must have a
minimum investment of US $100
million with at least half of the amount
invested in back end infrastructure
( cold chains, refrigeration, transportation,
packing, sorting and processing )
States have the right to add

restrictions to retail policy - place limits


on market share, style, diversity, and other
factors to suit their cultural preferences.
Opposition v\s support
The biggest
Independent stores beneficiary - small
will close, leading to farmers will be able to
massive job losses. improve their
(Walmart employs productivity by selling
very few people). directly to large
organised players.
Currently it is the
Walmart will lower
middlemen
prices to dump goods,
commission agents
get competition out of
who benefit at the cost
the way, become a
of farmers.
monopoly, then raise
prices. (Pepsi and Global investment
Coke) capital through FDI is
Organized retailers will lead to-
Reduced waste by improving logistics, creating
cold storage to prevent food spoilage.
Improve hygiene and product safety.
Create dependable supply chains.
They will increase choice for farmers.
Reduce inflation by reducing waste, spoilage
and cutting out middlemen.
Fresh investment will generate 10 million new
jobs by 2014.