Indian Retail Industry Presented by: Ravindra
Timeline
of Retailing in India
Source: Citigroup Research
GDP
growth and Retail
Retail, GDP growth
Organized Retail in 2010
Organized Vs Unorganized Retail Sector
Organized Retail Sector
Unorganized Retail Sector
Organized Vs Unorganized Retail Sector
Factor
Organized Retail Sector
Unorganized Retail Sector
Definition
Modern form of retailing
Traditional form of retailing
Examples
Hypermarket, Retail chain etc.
Mom n Pop stores, hand cart, pavement vendors etc
Market Share
3%
97%
Market Growth
35%
6%
Challenges
Poor supply chain management, aggressive expansion etc.
Use of labour intensive technology, lack of government support etc.
The
organized players
Indian
companies
Future Group Reliance Retail Bharti Shoppers'Stop Pyramid Aditya Birla Group Subhiksha Spencer Group Tata ± Westside, Tata ± Chroma
Foreign Players
Nike (Single brand) Levis (Single brand) Wal-mart (JV) Metro (Cash&Carry)
Pantaloon Retail
Headquartered in Mumbai 450 stores across the country employing more than 18,000 people. All India space- 5 mn sq.ft, expecting to reach 30 mn by 2010. Various segment including food & grocery, home solutions, consumer electronics, Health & Beauty product etc. Recent Innovations include e-commerce µHybrid Format of µSmall shops
Raheja Group
First Departmental store in India, SHOPPERS STOP
Member of IGDS
7,52,000 sq.ft. retail space with turnover of 6.75 millions
Crossword, Mothercare, Home stop etc.
MOU with Home retail group of UK
Plan to establish network of 55 hypermarkets across the country with sales turnover of US$ 100 million by2010.
Reliance Retail
More than 300 Reliance fresh store and first Reliance Mart hypermarket in Ahmedabed Expansion in two tier cities like Vijaywada, Pune, Ludhiana etc Investment
of Rs.30,000 cr to set up new formats of retail , expecting sales of Rs.90,000 cr by 2010
Tata
Retail Group
Established in 1998 Trent- subsidies of Tata group operates Westside and Star India Bazaar, Croma Plans to pen more than 27 stores across its retail formats adding 1.5 mn sq.ft. of space in the next 12 malls
DLF
Aditya
Birla Group
Strong presence in apparel- Madura Garments Owned Brands like Louis Phillipe, Van Heusen, Allen Solly, Peter England Investment
plan ± Rs.8000-9000 cr in the first 3 years till
2010
³MORE´ range of 15 supermarkets open at Nashik, Pune & other two tier cities
Organized retail and volume growth
Total
size of retail
$300bln
Size of organized retail
$8bln
% share of Organized retail
3%
Source: Economics times retail knowledge series
Major Department
Stores
Well established, limited competition Entrenched in Indian Mindset Score on shopping experience Stress on branding Price not critical as they cater to upper income class
Retail Formats Hypermarkets Relatively new concept, but already as big as department stores Growing fast, but competition to intensify Price Discount and Wide Varieties act as key attractions Key to success will be efficient Supply Chains and Store locations
Supermarkets and Conv. Stores Main challenge to mom and pop stores How to compensate for facilities that mom and pop stores provide namely Home Delivery and Monthly Credit ? Immense Competitions, building scale to achieve cost efficiencies will be critical
Market
Profile of Various Formats Stores: Shopper Stop, Lifestyle, Pantaloons
Department
Hypermarkets: Big Bazaar, Spencer
Supermarkets and Conv. Stores: Subhiksha, Trinethra
Source: India Retail Report, 2007, Merrill Lynch
Government
Policies
51% FDI allowed in single-brand formats
100% FDI in cash-and-carry format
NO FDI in multi-brand stores ( like Wal-Mart)
Trends indicate that the FDI would open up in retail sector, however political consensus has to be reached before that happens
Growth Drivers
& Barriers
Growth Drivers Consumption Boom, Higher Incomes Favorable Demographics Changing Lifestyles and Preferences Real estate boom Manufacturing Reforms Reduction in import dutiesoffering
Barriers to Entry Regulatory barriers Fragmented Suppliers Lack of infrastructure Supply Chain Complexities Lack of skilled Human Resource Differential Taxation System Labor Legislation Clustering of Malls
Outlook and challenges
Strong long-term growth potential Severe cost pressure largely related to property rentals Profitability likely to remain low - patient capital should survive but weak players likely to exit in the near term Consolidation is on the cards Driven more by traffic growth than ticket growth Convenience stores to remain integral part of retail Need for catering to local flavors Internet retailing still to pick up in India
Heard from the street««
Four years after announcing its wholesale joint venture with Bharti Enterprises, Walmart, the world¶s largest retail company, is still waiting for the multi-brand retail sector in India to open for foreign direct investment (FDI). Aditya Birla Retail, which runs stores under the More brand, plans capital spending of 2.5 billion rupees ($55.3 million) during the fiscal year that ends in March 2012.
Retail chain Shoppers Stop today said it may increase prices of its products by 6-7 per cent from April this year in order to offset the 10 per cent excise duty imposed on branded apparel in the Budget 2011-12. Walmart in talks to pick up stake in Future Group's Big Bazaar
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