Retail Sector Highlights

Global
Retail Sales (in $ Billions) Growth Rate 14,200
(Source: Economist Intelligence Unit)

India
353
(Source: IBEF, www.ibef.org)

3.8%
(Source: Economist Intelligence Unit)

12%
(Source: IBEF, www.ibef.org)

Organized Retail Penetration

USA France Japan Malaysia Brazil Russia China

- 85% - 80% - 66% - 55% - 36% - 33% - 20%

4% - 5%
(Source: IBEF, www.ibef.org)

(Source: IBEF, www.ibef.org)

Organized Retail growth rate

-

40%
(Source: IBEF, www.ibef.org)

Drivers for Indian growth 
Emergence of Organized Retail Business ‡ Investments/Ex ansion lans, ergers & cquisitions, Joint ventures/ lliances for market entry (Exhibit-1 & 2) ‡ Between 2010 and 2012, the organized retail real estate stock will more than double from the existing 41 million feet2 to 95 million feet2 (Source: knight Frank India retail report) Rising dis osable income & household consum tion levels ‡ Per ca ita income in 2009-10 more than doubled to US$ 849 from US$ 348 in 2000 01 ‡ GDP (PPP) forecasted to reach US $4.9 trillion by 2015. ‡ Indians have an ability to s end over US$ 30,000 a year (PPP terms) on cons icuous consum tion. Dis osable incomes are ex ected to rise at an average of 8.5 er cent er annum until 2015
(Source: IBEF, www.ibef.org) 

Changing Consumer ‡ Focus shifting from low rice to convenience, high value sho ing ex erience (The $3.5 billion Indian luxury retail market `is ex ected to grow to US$ 30 billion by 2015, with 25% growth er annum, making India the 12th largest luxury retail market in the world) Policy & Regulatory framework ‡ Im lementation of GST removes tax cascading effect ‡ FDI for multi-brand retail outlets Sector/Activity Wholesale, Cash & Carry Single brand roduct retailing 

FDI Cap/Equity 100% 51%
(Source: Mckinsey http://www.mckinsey.com/mgi/publications/india_consumer_markett)

(Source: India Brand Equity Foundation (IBEF) www.ibef.org)  



ulti-brand retail outlets

100% ( ro osed, not a

roved)

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Demogra hics & Increase in consumer class ‡ 60 ercent of India s o ulation is below the age of 30 ‡ India s consumer class estimated to grow to 583 million by 2025 ( urrently 50 million)

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Issues  

Logistics ($2.6 billion o ortunity) ‡ Su ly chain inefficiencies - Costing $40 billion annually (global)
(Source: IBM Smarter planet)

Country Ja an Euro e US India 

Logistic costs as percentage of GDP 11.37% 10% 9% 13%

Logistics activities performed by 3PL 80% 30% - 40% 57% < 10%

‡

Warehousing Inventory carrying Order Processing 

(Source: KPMG report, Indian retail

Time to change lanes) 

Shrinkage - ccounts to 3% of total sales. This is mainly due to ‡ Wastage & Errors ‡ Sho lifting ‡ Em loyee theft Inventory management ‡ Missed sales accounting to $100 billion (global)
(Source: IBM Smarter planet)

dministration

Source: Center for Global Logistics and Manufacturing Strategies, ISB 

Inventory turnover ratio US India 18 4 - 10

Stock outs 5% 5 15%

(Source: KPMG report: Indian retail) 

In India, the logistics costs as a com onent of total retail rice is 10% com ared to 5% global average. This is attributed to - Underdevelo ed su ly chains - Lack of strong cold chains - Poor warehousing facilities - Bad Infrastructure/roads - Lack of develo ed 3rd arty logistics industry (3PL)

Source: Center for Global Logistics and Manufacturing Strategies, ISB

Elements of Logistics cost Trans ortation

Contribution 39% 27% 24% 6% 4%

Exhibit 1 : Investment/Ex ansion lans
Company
Reliance Retail

Plans
Plans to invest US$ 125 million (INR 6 billion) to o en 200 Reliance Foot rint stores in tier II and tier III cities in India by 2013; Reliance Lifestyle lans to o en 3,000 new stores by 2015 Currently o erates more than 99 stores in 14 Indian cities, with 2.24 million sq ft. of trading s ace across 10 store formats; lans to aggressively ex and retail outlets across formats in new cities and achieve 3.89 million sq ft. of trading s ace by 2013 14 Plans to launch 100 Beverly Hills Polo Clubs (BHPC) stores by 2011 (currently has 14 stores) Plans to o en 50 more stores across India by 2012 13, which will include 35 lifestyle retail stores selling a arel, cosmetics and footwear, as well as about 15 Home Centers stores that will sell home furnishing goods, among others Plans to nearly double its retail stores by mid-2011 to around 120 from its existing 68 outlets, at an estimated investment of US$ 1.25 million Plans to invest u to US$ 2.5 billion (INR 120 billion) and add about 10 million sq ft. of retail s ace in five years Targeting 50 new stores during 2011 14 to double its resence in the Indian market cquired a 51 er cent stake in its Indian franchisee, Luxury Goods Retail Private Ltd, at an investment of US$ 217,000 (INR 10.42 million) in order to o en single-brand stores

Sho

ers Sto Ltd

S encer's Retail Ltd Lifestyle International Pvt Ltd

Timex grou Bharti Retail Marks and S encer Gucci Grou NV, Netherlands

Source: India Brand Equity Foundation (IBEF) www.ibef.org

Exhibit 2 : Region wise Retail o

ortunity

Source: CRISIL Research

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