Retail Marketing in India

RETAIL

Definition : Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser .The retail transaction is at the end of the supply chain.

IMPORTANCE OF RETAIL MARKETEconomic GrowthEmployment OpportunitiesMoves the economy into motionProvides the consumer a basic platform to

encounter with goods and a shop keeper

The total retail sales in India will grow from US$ 395.96 billion in 2011 to US$ 785.12 billion in 2015.

Contributes to 8% of the total employment.

Fastest growing sector in Indian Economy

SOME STATISTICS OF INDIAN RETAIL MARKET

CLASSIFICATION OF RETAIL SECTOR IN INDIA

Retail Sector

Organized

Wholesale

Specialist

Unorganized

Traditional Stores

Handcart Vendors

SUPERMARKET - A self-service store offering

a wide variety of food and household merchandise, organized into departments

HYPERMARKET - A hypermarket (from the French hypermarché) is a store which combines a supermarket and a department store

RETAILING SECTORS IN INDIAFood and GroceryClothing FootwearGems and JewelleryPharmaceuticalsMusicBookConsumer Durables

Watches27%

Footwear23%Clothing

12%

Books & Music8%

Health & Beauty7%

Consumer Durables6%

Furnitures6%

Catering4%

Entertainment3%

Jewellery2%

Pharma2%

FORMATS OF RETAIL MARKET IN INDIA

Mono/Exclusive Branded Retail Shops

Franchised/Owned Exclusive Showroom

Complete range of product

Multi-Branded Retail Shop

Same Product Category of

Different Brand

More choices for customers

MAJOR INDIAN RETAIL PLAYERS IN MARKET

Future GroupK Raheja GroupTata GroupRPG GroupLandmark GroupPiramal GroupSubhikshaRelianceAV Birla Group

RETAILING IN RURAL INDIAHaatsMelasVillage retailerMobile retailersVillage market

ORGANISED RETAILING IN VILLAGES

Godrej Aadhar

Hariyali

WHY RURAL MARKET?

Large population Increasing disposable incomeWestern influencesDemand for better qualityDesire for luxury

PROBLEMS

Dispersed population and tradeLow density of shopsInadequate bank and credit and investmentPoor storage system

FOREIGN DIRECT INVESTMENT (FDI)IN INDIAN RETAIL SECTOR

FDI refers to the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor.

INDIAN PERSPECTIVE Indian retail sector is largely closed to outsiders

to safeguard the livelihood of nearly 15 million small store owners

96% of the business run by unorganized retailers Only 51% foreign investment is allowed in single

brand retail with prior government permission. FDI is also allowed in wholesale business.

HOW TO ENTER INDIAN MARKET?CURRENT ENTRY OPTIONS FOR FOREIGN PLAYERS

Franchise Agreements • Most widely used entity route by multinational retailers.• Fast food retailers, Dominos, entered through master franchise while Pizza Hut entered through regional franchise.

Cash and Carry Wholesale Trading

• 100% FDI is allowed in wholesale trading which involves building of a large distribution infrastructure to assist local manufacturers.• Wholesaler deals only with smaller retailers and not consumers.

Strategic Licensing Agreements • Foreign company enters into a licensing agreement with the domestic retailer.• Mango, the Spanish apparel brand has entered India through this route with an agreement with Pyramid, India.

WHY INDIAN MARKET IS SO ATTRACTIVE

AT Kearney’s study on global retail trends found that India is least competitive as well as least saturated of all major global markets.

Good talent pool, unlimited opportunities, huge markets, availability of quality raw materials at cheaper costs, is expected to make India overtake the world’s best retail economy by 2042.

Market share of organized modern retail is just over 5% of the total retail industry, thereby leaving a huge untapped opportunity.

Myths of FDI

Myth 1

Farmers would get higher share of retail incomewith the entry of global organized retail chains.

FACTIn US the farm value share of consumer

expenditure for domestically produced farm foods has steadily declined from 33% to 21% from 1970 to 1994.

According to a European study, the real farm producer price index of total farm production fell by 27% over the period 1990-2002 .

- From The Economic Times

Myth 2

Increase in share of global organizedretail would lower prices in food articles.

FACT

Trends in the BLS (Bureau of Labour studies) food price index in US from 1950 to 2007 tend to somewhat mirror the general Consumer Price Index, with no steady decrease or increase.

- From The Economic Times

Myth 3

Global retail chains would procuredirectly from farmers.

FACTCurrently Wal-Mart procures only 20% (mainly

non-food category) of goods directly from manufacturers.

Most of the organized retailers procure from large wholesalers and other intermediaries.

- From The Economic Times

WHY THE BLAME GAME?CHANGE THE GAME!

SAMRIDDHI Kaushlendra Kumar

IIM-A

Introduced the farm fresh produce(FFP) retail chain supply model.

Economic status of 3000 poor farmers and 500 street vendors in Bihar has gone up.

CONCLUSIONIndian Retail Market has a huge room

for developmentDevelopment and progress should not

come at other’s costProper government measures can

assure healthy growth

Presented By -

BalajiRakeshUnniManjuBlesson