January 2015

Organised Retail

Emerging Trends and Way Forward

Watchouts Stronger

• inflation due to market inefficiencies and supply bottlenecks

• Below-average monsoon rains

India retail

landscape and

evolution

Indian Retail sector is scaling new heights with a gradual shift towards Organized retailing.

In 2013, the India retail sector was estimated at USD 520 Billion with organized retail penetration of 7.5% which is expected to reach USD 950 Billion by 2018

520

950

0

100

200

300

400

500

600

700

800

900

1000

2013 2018

US

D B

illio

n

Total Retail Market

Source: Pulse of Indian Retail Market; EY RAI Report

7.5% Organized retail

penetration

10% Organized retail penetration

2013 2018

Organized Retail Penetration

CAGR

20%

Total Retail Market Size:

USD 520

Total Retail Market Size:

USD 950

India Retail Sector – Scaling New Heights

70

12

6

4 5

1 4 3 1

Source: JLL Research-India’s retail Luxury Quotient-Exploring the Luxury clusters of India

India Retail Sector – Scaling New Heights

24

35 20

4

10

2 8

6 1

Beauty, Personal and

Healthcare

Apparel

Consumer Durables, Mobiles

and IT

Home Décor and Furnishings

Food and Grocery

Pharmacy

Jewellery, Watches and Eye

Care

Footwear

Books and Music

93%

Unorganized

Retail

7%

Unorganized retail sector is largely concentrated around the food and grocery segment, while the organized sector has harped

on apparels, accessories and lifestyle goods.

Organized Retail (2011-12) Unorganized Retail (2011-12)

Organized Retail Unorganized Retail

India Retail Sector – Growth Triggers

Growing Urbanization

Easy availability of credit

Rising Working and Younger

Population

Liberalization of FDI Policy

200 million Indians would be reaching working

age over the next two decades

27 Median age of India’s Population

Rising Income Levels

Driven by favorable demographics and rising income level, there has been transformation in Indian retail sector to match the

varying needs of the consumers

Source: For Median age- Central Intelligence Agency

Retail and Retail

Real Estate: Key

Trends

India Retail Sector – Key Trends

Entry of

Global

Retailers

1

Newer

Formats

2 5

E- retailing

3

Penetration in

Tier 2,3 cities

and beyond

4

Right Strategy

driving

exceptional

sales

• Liberalization of FDI in multi brand retail is further paving the way for entry of global retailers in India

• International retailers are introducing global best practices and formats to Indian outlets including design, layouts and fit-outs

Trend 1-Entry of Global Retailers in India

Pre 2010 2010 onwards

Timeline of entry

Brands planning to enter

USD 259

Million

FDI in Single Brand Retail

since April 2010

Leveraging the opportunity in high footfall areas through smaller formats

In order to ensure wider spread and reach, Croma introduced Zip stores and portable kiosks apart from the standardized mega store

formats

Reliance Digital – brought a similar smaller format – Reliance DX

CROMA ZIP – STORE AT AIRPORT RELAINCE DX MULTI – CHANNEL RETAILING

Trend 2-Newer Formats Smaller/ Multiple Formats to Capture Larger Footfalls

Vodafone-Stepping ahead through futuristic one stop shop experience platform for customers

Launched “Innovative Design” retail concept Based on a Concept in international markets.

offers live and engaging retail experience

VODAFONE

Trend 2-Newer Formats Offering the Experience

Vodafone

“DUNKIN’ DONUTS” VS “DUNKIN’ DONUTS & MORE”

F&B QSR Chains – Dunkin Donuts, Mc Donalds, KFC – customized their retail offering to better suit the Indian Consumers

Trend 2-Newer Formats Global + Local Approach

“It's a part re-invention. The market for ethnic

clothing is for occasions or when people feel

patriotic but ethnic as everyday wearing is not

prevalent anymore.” - William Bissell, Fabindia

Fabindia is reinventing itself with western wear line -

Fable

Trend 2-Newer Formats Global + Local Approach-Opposite end of the spectrum

INOX Cinemas – second largest cinema chain in the

country has multiplex located in following cities

• Anand

• Aurangabad

• Bangalore

• Belgaum

• Bharuch

• Bhopal

• Bhubaneswar

• Burdwan

• Chandigarh

• Chennai

• Darjeeling

• Dhanbad

• Durgapur

• Goa

• Hyderabad

• Indore

• Jaipur

• Kanpur

• Kolkata

The opportunity landscape in India spans beyond the major metros

Cinema chains footprint highlight the vastness and scale of this opportunity

Trend 3-Penetration in Tier II, Tier III and beyond

Trend 4-Right Strategy driving Exceptional Sales

Fast fashion brand Zara, which opened its shop in India in 2010 have crossed USD 83.3 Million (INR 500-crore) sales mark

It clocked 43 % annual growth in its sales for the year ended March 2014

Reasons for remarkable

Growth:

• Right Merchandise

• Brands Pricing and

Inventory Rotation

• Keeping Real Estate

cost in control

Right Product , Right Offering and Right Real Estate Strategy

Online shoppers to rise from

25 Mn to 40 Mn by 2016

USD 2.3 Billion

Market Size of E-tailing

in India

2014

USD 19 Billion-

USD 38 Billion

Market Size by end

of this decade

Source: Times of India, Business Standard, Business Today

Trend 5-Growing Prominence of E-tailing

Retail Real Estate Overview in India

Retail Real Estate

Overview in India

Retail Real Estate: Stock and Supply

Note: Figures represent the top seven cities of India – Mumbai, NCR-Delhi, Bangalore, Chennai, Pune, Hyderabad and Kolkata.

45.3 53.3

66.5 70.8 76.0 77.3 87.35

97.62 7.97

13.20

4.30 5.23

1.30 10.01

10.27

6.55

0

20

40

60

80

100

120

2010 2011 2012 2013 2014 2015 2016 2017

Bu

ilt-u

p A

rea

(Mill

ion

Sft

)

Stock Net Addition

53.3

66.5 70.8

76 77.3

87.3

97.9 104.1 Historically low supply

in last many years

2014 witnessed historically low supply in many years with very few malls getting operational

Increasing focus on developing quality international standard malls with right planning and mall

management

Rising Opportunities in emerging cities and newer locations: as retailers gear up to explore the new

opportunities beyond the Tier 1 cities

India has positioned itself firmly on the radar of international brands thus generating the opportunities

for development of next gen retail real estate development

Retail real estate developments are being upgraded to meet the global standards of international

retailers requirements

1

2

3

4

5 Coming up of various newer retail formats through collaboration of multiple stakeholders

Retail Real Estate: Key Trends

Poor infrastructure limits growth and Profitability. E -tailing

would further act as a competition to physical stores

Regulatory hurdles are high, especially in obtaining licenses

and permits

Real Estate cost especially in larger cities act as a deterrent to

growth

Quality Space Availability: Difficulty in finding suitable and

quality retail properties in bigger cities

High operational cost and deep discounting to improve

sales have affected profits of retailers

1

2

3

4

5

Retail Real Estate: Key Challenges

Key to Success

• Indian retail and real estate market is quite dynamic with fast paced evolution. The brand expansion strategy should be flexible that can change according to market conditions.

• Indian retail real estate is an opportunistic market and therefore the expansion plan should be managed/ executed strategically.

• Churning in newer and innovative ideas in order to cater the discerning consumers

• Rising opportunity in Tier I and II cities but due to lack of quality space the expansion in these cities needs to planned taking into account the consumer profile and the supply of mall developments

Retail Real Estate: The way forward

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