Retail Sector

Analysis
GROUP 3

MOHIT

PREETHAM

SALMAN

PA R T H

SAKSHI

AY U S H I

D I V YA
Size of the Industry
The Indian retail industry has emerged as one of the
most dynamic and fast-paced industries due to the
entry of several new players.
Retail industry reached to Rs 66.39 lakh crore (US$
950 billion) in 2018 at CAGR of 13 per cent and
expected to reach Rs 76.87 lakh crore (US$ 1.1
trillion) by 2020
It accounts for over 10 per cent of the country’s Gross
Domestic Product (GDP) and around 8 per cent of the
employment.
India is the world’s fifth-largest global destination in
the retail space
Retail in India
The value of the organized retail is Rs. 35,000
crores and of the unorganized is Rs. 9,00,000
crores approximately. The organized retailing is
growing at a rate more than 30%
During 2018-20, India has pegged supply of retail
space in malls at 19.4 million sq ft, while demand
will be about 15 million sq ft.
Collective efforts of financial houses and banks
with retailers are enabling consumers to go for
durable products with easy credit
Structure of Major
players
Shoppers stop -240 stores,38 cities,Total income of Rs
3,499 crore in FY19 and Rs 1,698.27 crore in H1FY20.
Dmart - 176 stores,163 locations, Total income of Rs
19,968 crore in FY19 and Rs 11,750.3 crore in H1FY20
Reliance Fresh (502 stores). Titan Industries is a large
player, with 438 World of Titan, 200 Tanishq and 470
Titan Eye+ shops.
Future Retail -1,035 stores,321 cities, Total income of Rs
20,185 crore in FY19 and Rs 10,676.90 crore in H1FY20.
Growth Over Past 5
years
The Indian retail industry is one of the fastest growing in
the world. Retail industry reached to Rs 66.39 lakh crore
in 2018 at CAGR of 13 per cent and expected to reach Rs
76.87 lakh crore by 2020.

India ranked 63rd in World Bank’s Doing Business 2019.

India’s retail sector is experiencing exponential growth,

with retail development taking place not just in major
cities and metros, but also in Tier-II and Tier-III cities.

Revenue generated from online retail is projected to

grow to Rs 4.19 lakh crore (US$ 60 billion) by 2020.
Growth Over Past 5
years
The Government of India has introduced reforms to
attract Foreign Direct Investment (FDI) in retail
industry. The government has approved 51 per cent
FDI in multi-brand retail and 100 per cent in single
brand retail under the automatic route which is
expected to give a boost to ease of doing business.
Cumulative FDI inflow in retail between April 2000 to
June 2019 stood at US$ 1.85 billion.
So far, India has become a favorable market for
fashion retailers on the back of a large young adult
consumer base, increasing disposable incomes and
relaxed FDI norms.
Expected growth rate
Currently, driven by strong macroeconomic factors, India is one of
the fastest growing economies globally and the fourth largest retail
market in the world.
The Indian retail industry expects to bounce back in the second half
of 2020.
Major players struggled in 2019, they expect a decent double-digit
growth coming back in 2020 however, sectoral experts are cautious,
saying it would depend on various factors like-
1. recovery of manufacturing and other sectors,
2. incentives in the Union Budget,
3. and availability of money in the hands of consumers to make
purchasing decisions
Expected growth rate
Retailers are continuously trying to fully tap the depth of this potential by making use of
latest technologies which form the backbone of modern retailing.

The burgeoning millennial population, growing middle income households and

increasing women workforce provide a highly positive outlook for the retail businesses
in India.

Fuelled by these factors, the Indian retail industry is expected to grow from US$ 790
billion in FY 2019 to US$ 1400 billion by FY 2024, as the overall economy crosses the US$
5 trillion mark.

A major driver of high growth trajectory has been online retail which is projected to
grow at a CAGR of 33 percent between FY 2019-24. Growth in online retail is majorly
attributed to factors including:

– Increasing internet penetration

– Growth in number of smartphone users
– Growing number of online shoppers
Key learning for Retailers Going into the
Future
Retailers are required to work continuously towards gaining a
competitive advantage by using innovative retail formats and next gen
methods.
Modern retail should have the ability to offer guidance towards the
right purchase decision by projecting an understanding of the
customer profile.
Having realised the scope of mass digitization of the retail ecosystem,
retailers are required to proactively take steps to achieve enhanced
customer value.
Retailers need to invest funds towards revitalising the customer
experience to build loyalty and stem churn by providing individualised
experiences at scale.
Growth Drivers of retail industry
Indian consumers are now shifting more towards
premium brands by paying more for value and service
Preferences towards affordable luxury and rising
middle class population are developing preferences for
specific brands.
Consumers have become more comfortable using
online services due to demonetization
India’s retail sector attracted Rs 9.5 investments in
FY18, at a growth rate of 35 per cent year-on-year from
Rs 7 billion in FY17.
 Segmental Analysis
Major segments of the retail industry
Organised Retail - is a sector which consists of the
companies which are associated with production or sales
of goods and services that operates as private limited
organizations which are governed by companies act. It
stands at 7%
Unorganised Retail - The unorganized retail sector
primarily comprises of the small-scale retail stores, with
little or no standardization, selling goods and services
(ideally in fragmented quantities) to the local customers
within a small geographical area or locality. It stands at
93%
Shares of major segments
in india
Food and grocery is expected to remain the largest in sales
value terms during the forecast period, growing at a CAGR of
11.6%
Metro started the cash and carry model in India; the company
operates 24 stores across Mumbai, Kolkata, Delhi, Punjab,
Hyderabad and Bengaluru.
The domestic textiles and apparel industry contributes 2.3% to
India's GDP and accounts for 13% of industrial production, and
12% of the country's export earnings. The textiles and apparel
industry in India is the second-largest employer in the country
providing employment to 45 million people.
Future of Segmental changes
Food and grocery retailing is one of the world's oldest and
largest industries. According to Grand View Research, global
market size is expected to reach $12.24 trillion by 2020.
Changing consumer lifestyles and food choices are driving
structural changes in the business models of food retailers.
Retail has changed significantly over time, most recently the
introduction of the Internet and other technology has had
significant impact on shopping behavior.
Indian retail seems to have moved from unorganized retail to
online retailing which is future of the unorganized sector.
Key Operating Metrics
Conversion Rate
Conversion Rate = number 0f visitors / number of individual
purchases x 100
Sales per Square Foot
Sales per Square Foot = Total Net Sales ÷ Square Feet of Selling
Space
Gross Profit
Measurement of profit that indicates the amount a company earns
per dollar of sales
Net profit
The net profit margin is the ratio of net profits to revenues for a
company or business segment.
Key Operating
Metrics
Average Transaction Value
Year Over Year Growth
Foot traffic
Shopper Dwell Time
Retail industry dynamics

1. Digitizing and empowering store staff

2. Leveraging customer data for better
personalization
3. Becoming the Brand/Store loved by the
community
Source: Retail Leadership Summit 2020
Critical success factors
Market position – Market positioning projects a clear and consistent image of
the business and enables small and medium sized businesses to compete against
larger players. Retail business owners and managers should consider product
branding as well as physical location.

Technology Matters - Technology is also a major factor in driving customer

traffic. Utilizing Facebook and other online platforms is a necessity, and one that
will keep your store in the forefront of current and potential customers’ minds.
Announcing sales and new products on these platforms will keep interest high,
and drive traffic to your store

Source-www.retailflux.com, bizfluent.com
Critical success factors
Customer Service- Once consumers are inside your location, your customer service
is the most important factor in generating sales and repeat customers. If your
customers are well-served, they are considerably more likely to make a purchase
during their visit, and to return later. Ensuring that all employees understand the
importance of exceptional customer service will go a long way in helping your retail
location see success.
Branding is Key - Whatever your line of goods – antiques, trendy boots, imported
Thai candy – you have an advantage if customers associate your products with your
store, rather than Amazon or Walmart. Sephora, the high-end makeup stores, thrive
in part because of exclusivity. The expensive products women buy at Sephora aren't
available on Amazon, which makes Sephora a destination worth driving to.
Government Policy for Retailing in India

Indian government policy about development of retail

industry has been liberal and motivating. The Indian traders/
retailers register their outlets/shops with concerned
authorities in various states and by honoring sales tax and
other obligations of the state concerned, they can run their
retail business.
Recent events in retail industry
Rs 37 lakh penalty on Samsung for not passing GST credit

Voltas invests Rs 65 cr to set up new mfg unit in Gujarat

A-grader DMart moved to ‘T’ segment to cool down punters

Nike temporarily closes European headquarters due to coronavirus case

China-made phones off speed dial as supply chains disrupted amid

coronavirus outbreak

Mandatory for government departments to make 20 per cent handloom

purchase from KVIC, registered weavers

Asia's garment industry sees lay-offs, factories closing due to coronavirus

Recent events in retail industry
IndiaMART becomes first B2B marketplace in India to
register 10 crore users
Amazon joins food delivery business in B’luru
AC prices to go up by 5 per cent due to customs duty hike,
rise in logistics cost amid Coronavirus scare
Walmart to turn some stores into Flipkart warehouses
Indian retail market to reach $1 trillion by 2025: Report
No checkout needed: Amazon opens cashier-less grocery
store
COST AND PROFITABILITY

FUTURE GROUP

PROFITABILITY

0.03831
COST AND PROFITABILITY

RELIANCE GROUP

PROFITABILITY

0.1124