Global Retailing Scenario

&

Its FutureBy: Varun modi

ROLL NO. 4472

INTRODUCTION TO RETAILING

•Retailing consists of the sale of goods or merchandise for personal or household consumption either from a fixed location such as a shopping mall or store, or from a fixed location and related subordinated services. •In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells individual items or small quantities to the general public or end-user customers, usually in a shop, also called a store. •Retailers are at the end of the supply chain. Marketers see retailing as part of their overall distribution strategy.

•Retail comes from the French word retaillier which refers to "cutting off, clip and divide" in terms of tailoring (1365).• It first was recorded as a noun with the meaning of a "sale in small quantities" in 1433 (French). •Its literal meaning for retail was to "cut off, shred, paring". •In both Dutch and German also refer to sale of small quantities or items.

Etymology

•Shopping is the purchase of goods and services from retailers.Shopping involves selection and purchase

•"Window shopping" is an American/English phrase meaning to look into glass windows of a shop for entertainment and imagine purchasing items without actually purchasing, possibly just to pass the time between other activities, or planning a purchase. •“Screen shopping" is derived from this term but applies to online retail stores (i.e., window shopping through a computer screen).•“Internet Shopping”(eBay, Amazon)•Shopping is fun for some people.

Shopping

Modern Format retailers (Organized retailing) Supermarkets (Subhiksha) Hypermarkets (Big Bazaar) Department Stores (Shoppers Stop)

Cash & carry (wal-mart yet to come)

Company Owned Company Operated (Bata)

Traditional Format Retailers (Unorganized Retailing)

Traditional Mom and Pop Stores: (KIRANA) Kiosks Street Markets Exclusive /Multiple Brand Outlets

Classifying Retail

•In France, the dominant chain is Carrefour 2nd largest chain of hypermarkets in the world after Wal-Mart

•Hypermarket is a superstore which combines a supermarket and a department store. •Gigantic retail facility carries an enormous range of products under one roof. •A consumer can ideally satisfy all of his or her routine weekly shopping needs in one trip to the hypermarket.•A typical Wal-Mart Supercenter covers 150,000 square feet,•A typical Carrefour 210,000 square feet•Hypermarkets choose suburban or out-of-town locations that are easily accessible by automobile.•The concept was pioneered by Carrefour upon opening its first such store in 1962 at Sainte-Geneviève-des-Bois, France

Hypermarket

SupermarketA supermarket is a departmentalized self-service store offering a wide variety of food and household merchandise. It is larger in size and has a wider selection than a traditional grocery store. The traditional supermarket occupies a large floor space on a single level and issituated near a residential area in order to be convenient to consumers The first true supermarket in the United States was opened by ex-Kroger employee Michael J. Cullen, on August 4, 1937, in a 6,000 square foot (560 m²) former garage in Jamaica, Queens,

New York

Department StoreDepartment stores usually sell products :•Apparel •Furniture •Electronics Appliances•Paint•Toiletries & Cosmetics •Photographic equipment•Jewellery •Toys•Sporting goods.

Convenience store A convenience store is a small store or shop, generally accessible or local.Alongside ,busy roads, gas/petrol stations. Railway stations,densely-populated urban neighborhoods.

Items offered are milk, bread, soft drinks, cigarettes, coffee, slurpees, candy bars, sandwiches, pizza hot dogs, ice cream, candy, gum, chips, popcorn, maps, magazines, newspapers, small toys, feminine hygiene products, cat food, dog food, and toilet paper. CD, DVD, video game

For meeting immediately or temporarily requirements.

Cash and Carry•Goods are sold from a wholesale warehouse operated either on a self-service basis or on the basis of samples retailers•Professional users, caterers, institutional buyers are customers•Wholesalers buy from manufacturers and sell mostly to retailers•Selling and promoting, buying and assortment building, warehousing, transporting, financing, risk-bearing, supplying market information, and providing management services •Cash and carry wholesaler arrange the transport of the goods themselves and pay the goods in cash and not on credit •100% FDI is allowed in this format in INDIA.•WAL-MART & BHARTI. Joint venture based on this strategy. •METRO(GERMANY), CARREFOUR(FRANCE),TESCO(U.K) planning to enter through the same format.

Other retailing Formats

Kiosk

Variety store

•Berjaya Times Square in Kuala Lumpur, Malaysia, is 700,000 m². (approximately 7 million square feet). •Beijing's Golden Resources Shopping Mall, opened in October 2004, is the world's largest, at 600,000 m² (approximately 6 million square feet). •SM Mall of Asia in the Philippines, opened in May 2006, is the world's third largest at 386,000 m² square meters of gross floor area with further expansions still ongoing. •The Mall of Arabia inside Dubailand in Dubai, United Arab Emirates, which will open in 2008, will become the largest mall in the world, at 929,000 square meters (10 million sq. feet).(22000 small shops of avg 50 sq.yds in india)

World`s largest Malls

Global Retailing FactsWorld’s largest private industry

Above US $ 8 trillion sales worldwide annually

Accounts for almost 10% of GDP in most countries

Major employer in most economies

–16% in US

–15% in Brazil

–12% in Poland

– 7% in China

Generates competition which results in

–reduction of prices

–product and service innovation

–enhanced customer experience

Major driver for real estate and urban development

Biggest retail Sales countries of the world

•U.S U.S $ 4 tn (13 times of Indian market)

•E.U U.S $ 2 tn

•JAPAN U.S $ 1 tn

•CHINA U.S $ 750 bn

•U.K U.S $ 444 bn

•INDIA U.S $ 300 bn

•RUSSIA U.S $ 200 bn

Biggest retailers of the World

U.S.A

FRANCE

U.S.A

U.S.A

U.K

US $316 Bn

US $95 Bn

US $73 Bn

US $62 Bn

US$56 Bn

Reason For Success of Global Retailers•Better Consumer Demand

•Better Consumer Confidence

•Computer Operated Depots

•Better Logistical System

Weekly MarketsVillage FairsMelas

Convenience StoresMom and Pop/Kiranas

PDS OutletsKhadi StoresCooperatives

Exclusive Brand OutletsHyper/Super MarketsDepartment StoresShopping Malls

Traditional/Pervasive Reach

Government Supported

Historic/Rural Reach

Modern Formats/ International

Source of Entertainmen

t

Neighborhood Stores/Convenie

nce

Availability/ Low Costs / Distribution

Shopping Experience/Efficie

ncy

Evolution of Indian retail

Evolution of Indian retail Informal retailing Sector

Typically small retailers. Evasion of taxes

Difficulty in enforcing tax collection mechanisms

No monitoring of labor laws

Formal Retailing Sector Typically large retailers Greater enforcement of taxation

mechanisms High level of labor usage monitoring

Large Indian retailers Hypermarket

Big Bazaar Giants Shoprite Star

Department store Lifestyle Pantaloons Piramyds Shoppers Stop Trent

Entertainment Fame Adlabs Fun Republic Inox PVR

The changing Indian consumer

Greater per capita income Increase in disposable income of

middle class households 20.9%* growth in real disposable

income in ’99-’03. Growing high and middle income

population Growing at a pace of over 10%* per

annum over last decade Affordability growth

Falling interest rates Easier consumer credit Greater variety and quality at all

price points

†From Euromonitor Retail Survey

The urban consumer Getting exposed to international

lifestyles Inclined to acquiring asset More discerning and demanding

than ever

No longer need-based shopping Shopping is a family experience

Changing Mindset Increasing tendency to spend Post Liberalization children coming

of age100 mn 17-21 year olds*. Tend to spend freely.

Greater levels of education

The changing Indian consumer

Anticipated growth Market size

Current market size is roughly US$ 300 bn

Only 3% is through organized retailing

96% of the 12 Million stores are less than 500 Sq. ft.

Forecast Growth rate for the retailing industry is roughly 8.3% for 2003-2008

Sales from large format stores would rise by 24-49%

Formal and modern format retailing would enjoy rapid growth

India`s growing no. of domestic retail chains

FDI in Indian retailingCurrent Indian FDI Regime

FDI not permitted in retail trade sector, except in:

Hi-Tech items / items requiring specialized after sales service Medical and diagnostic items Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator)

FDI in Indian retailing•No FDI is allowed in multiple brand retailing

•100% FDI allowed in cash & carry format(e.g Walmart-Bharti)

•51% FDI allowed in single brand retailing(Nike,Gucci,Versace,Mcdonald)

How FDI ? FDI should be allowed in stages

Initial stages: 26% FDI

Establishment Phase: 49% FDI

Mature Phase: 100% FDI

FDI policy No incentives needed to attract FDI Market size and potential are

sufficient inducers No need for costly tax breaks, import

duty exemptions, land and power subsidies, and other enticements

3 yrs.

3 yrs.

Hot DestinationsTier 1 cities:

Delhi,Mumbai,Kolkata,Chennai

Tier 2 cities:

Hyderabad, Bangalore, Ahmedabad, Gurgaon, Pune, Baroda,Noida

Tier 3 cities:

Chandigarh, Coimbatore, Trivandrum, Faridabad, Ludhiana, Cochin, Shimla, Mysore,Amritsar

•                  Future Group                   Trent Ltd                   RPG Enterprise                   Vishal Retail Ltd                   Shoppers Stop Ltd                   Bata India Ltd                   Provogue India Ltd                   

PrevailingMajor Players

Forthcoming Mammoths

Reliance Retail

Bharti Retail

Birlas

Tatas

Godrej Adhaar

ITC e-choupal

Case study : Chinese retailing FDI permitted in 1992. 40 foreign

retailers have secured approval Retail sales have grown@19.5% yoy

since FDI was permitted

FDI initially restricted to 6 major cities (including Beijing, Shanghai and Guangzhou) and SEZs

Foreign ownership initially restricted to 49%

US$ 22 bn of FDI attracted, 3.6% of total FDI

In 2003, FDI in wholesale and retail was US$ 1.1 bn (Around 30% of our total FDI in 2003)

Current restrictions on FDI will be phased out over 5 years as condition of WTO entry

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FDI in retail allowed

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Retail sales grew @ 19.5% yoy for the next 4 years after the introduction of FDI in 1992

Years

Current News•Eleven retailers gearing up for IPOs•40 retail players to spend $25 billion in next four years•Aditya Birla Group signifies intent to become leading player in retail industry •Big Bazaar to open 60 new stores•Shoppers’ Stop gears up for luxury retail •Reliance targets Rs. 100000 crs. Retail sales target•Dabur explores entering consumer retail business•The retail industry in India is estimated at $427 billion in 2010 and US$ 637 billion in 2015

Recommendations Grant industry status to retail Permit FDI in Retail in phases Invest in supply chain infrastructure Ease distribution – infrastructure

creation, octroi Ensure single window clearance for

retail chains Organize market for real estate

Ensure proper rent laws Enforce zoning laws and city

development plan Increase land supply

Ensure flexibility of labor laws

THANKS !

You Will You Will always Shop always Shop In This Way In This Way in Future !in Future !

THANKS !