Retail India Ppt

8/9/2019 Retail India Ppt

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Industry Evolutiony Traditionally retailing in India can be traced toy The emergence of the neighborhood Kirana stores catering to the convenience of the

consumers

y Era of government support for rural retail: Indigenous franchise model of storechains run by Khadi & Village Industries Commission

y 1980s experienced slow change as India began to open up economy.y Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim

first saw the emergence of retail chainsy Later Titan successfully created an organized retailing concept and established a series

of showrooms for its premium watchesy The latter half of the 1990s saw a fresh wave of entrants with a shift from

Manufactures to Pure Retailers.y For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music

World in music; Crossword and Fountainhead in books.y Post 1995 onwards saw an emergence of shopping centers,

y mainly in urban areas, with facilities like car parkingy

targeted to provide a complete destination experience for all segments of societyy Emergence of hyper and super markets trying to provide customer with 3 Vs - Value,

Variety and Volumey Expanding target consumer segment: The Sachet revolution - example of reaching to

the bottom of the pyramid.y At year end of 2000 the size of the Indian organized retail industry was estimated at

Rs. 13,000 crore


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y The Indian retail market, which is the fifth largest retail destination globally, has been

ranked as the most attractive emerging market for investment in the retail sector by ATKearney's eighth annual Global Retail Development Index (GRDI), in 2009. The share of

retail trade in the country's gross domestic product (GDP) was between 810 per cent in

2007. It is currently around 12 per cent, and is likely to reach 22 per cent by 2010.

y Banks, capital goods, engineering, fast moving consumer goods (FMCG), software

services, oil marketing, power, two-wheelers and telecom companies are leading the sales

and profit growth of India Inc in the fourth quarter of 2008-09. India continues to be

among the most attractive countries for global retailers. At US$ 511 billion in 2008, its

retail market is larger than ever and drawing both global and local retailers. Foreign

direct investment (FDI) inf lows as on July 2009, in single-brand retail trading, stood at

approx. US$ 46.60 million, according to the Department of Industrial Policy and

Promotion (DIPP).


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y The organised retail sector, which currently accounts for around 5 per cent of the Indian

retail market, is all set to witness maximum number of large format malls and branded

retail stores in South India, followed by North, West and the East in the next two years.

y According to the report Mall Realities India 2010 by leading property consultants, Jones

Lang LaSalle Meghraj and Cushman & Wakefield India in association with ShoppingCentres Association of India, over 100 malls of over 30 million sq feet of new shopping

centre space are projected to open in India between 2009 and end-2010.

y Further, this sector is expected to invest around US$ 503.2 million in retail technology

service solutions in the current financial year. This could go further up to US$ 1.26 billion

in the next four to five years, at a CAGR of 40 per cent.


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y India has one of the largest numbers of retail outlets in the world. The sector is

witnessing exponential growth with retail developments taking place not only in major

cities and metros but even in tier-II and tier-III cities in India.

y Marks & Spencer Reliance India is planning to open 35 more stores over the next five

years, according to Mark Ashman, CEO of the company. The 51:49 joint venture between

UKs Marks and Spencer and Reliance Retail Ltd already has 15 stores in India.

y Carrefour SA, Europes largest retailer, may start wholesale operations in India by 2010

and plans to set up its first cash-and-carry outlet in the National Capital Region.

Currently, Carrefour exports goods worth US$ 170 million from India to Europe, UAE,

Indonesia, Europe, Thailand, Singapore and Malaysia.

y Jewellery manufacturer and retailer, Gitanjali Group and MMTC are jointly setting up a

chain of exclusive retail outlets called ShuddiSampurna Vishwas. The joint venture,which plans to open around 60 stores across India by end of this year, will retail

hallmarked gold and diamond jewellery.


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CCA classification [1] HRA classification [1] City

A-1 A-1 Mumbai

A-1 A-1 Delhi

A-1 A-1 Kolkata

A-1 A-1[ Chennai

A-1 A-1 Bangalore

A-1 A-1[ Hyderabad

A A Ahmedabad

A A Pune

A A Surat

A A Kanpur

A A CoimbatoreA A Lucknow

A A Nagpur

A A Jaipur

A A Visakhapatnam

A A Vijayawada


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Retailing formats in Indiay Malls:

The largest form of organized retailing today. Located mainly in metro cities, in proximity tourban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an idealshopping experience with an amalgamation of product, service and entertainment, all

under a common roof.Examples include Shoppers Stop, Piramyd, Pantaloon.

Specialty Stores:

Chains such as the Bangalore based Kids Kemp, the Mumbai books retailerCrossword,

RPG's Music World and the Times Group's music chain Planet M, are focusing on specific

market segments and have established themselves strongly in their sectors.

Discount Stores:

As the name suggests, discount stores or factory outlets, offer discounts on the MRP

through selling in bulk reaching economies of scale or excess stock left over at the

season. The product category can range from a variety of perishable/ non perishable

goods


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Departmental Stores are expected to take over the apparel business from exclusivebrand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop,which started in Mumbai and now has more than seven large stores (over 30,000 sq.ft) across India and even has its own in store brand for clothes called Stop!.

Hypermarts/Supermarkets:

Large self service outlets, catering to varied shopper needs are termed as Supermarkets. Theseare located in or near residential high streets. These stores today contribute to 30% of all food &grocery organized retail sales. Super Markets can further be classified in to mini supermarketstypically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000sq ft. having a strong focus on food & grocery and personal sales.

Convenience Stores:

These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock

a limited range of high-turnover convenience products and are usually open for extendedperiods during the day, seven days a week. Prices are slightly higher due to the conveniencepremium.

MBOs :

Multi Brand outlets, also known as Category Killers, offer several brands across a singleproduct category. These usually do well in busy market places and Metros.

Department Stores:

Large stores ranging from 20000-50000 sq. ft, catering to a variety of

consumer needs. Further classified into localized departments such as clothing,

toys, home, groceries, etc.


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Retailing formats in IndiaIndias number ofDomestic grocery chains and Early Foreign Entrants


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Recent Trendsy Retailing in India is witnessing a huge

revamping exercise as can be seen in thegraph

y India is rated the fifth most attractive

emerging retail market: a potentialgoldmine.y Estimated to be US$ 200 billion, of which

organized retailing (i.e. modern trade)makes up 5 percent or US$ 6.4 billion

y As per a report by KPMG the annualgrowth of department stores is estimatedat 24%

y Ranked second in a Global RetailDevelopment Index of 30 developingcountries drawn up by AT Kearney.

Retail Sales in India


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Unorganized : Vast majority of the twelvemillion stores are small "father and son"

outlets

Fragmented : Mostly small individuallyowned businesses, average size of outletequals 50 s.q. ft. Though India has thehighest number of retail outlets per capitain the world, the retail space per capita at2 s.q. ft per person is amongst the lowest.

Rural bias: Nearly two thirds of the storesare located in rural areas. Rural retailindustry has typically two forms: "Haats"and Melas". Haats are the weeklymarkets : serve groups of 10-50 villagesand sell day-to-day necessities. Melas arelarger in size and more sophisticated interms of the goods sold (like TVs)

Unorganized : Vast majority of the twelvemillion stores are small "father and son"

outlets

Fragmented : Mostly small individuallyowned businesses, average size of outletequals 50 s.q. ft. Though India has thehighest number of retail outlets per capitain the world, the retail space per capita at2 s.q. ft per person is amongst the lowest.

Rural bias: Nearly two thirds of the storesare located in rural areas. Rural retailindustry has typically two forms: "Haats"and Melas". Haats are the weeklymarkets : serve groups of 10-50 villagesand sell day-to-day necessities. Melas arelarger in size and more sophisticated interms of the goods sold (like TVs)

Traditionally three factors have plaguedthe retail industry:

Traditionally three factors have plaguedthe retail industry:

Experimentation with formats: Retailing in India is still

evolving and the sector is witnessing a series of experiments

across the country with new formats being tested out. Ex.

Quasi-mall, sub-urban discount stores, Cash and carry etc.

Store design : Biggest challenge for organised retailing to

create a customer-pull environment that increases the

amount of impulse shopping. Research shows that the

chances of senses dictating sales are upto 10-15%. Retail

chains like MusicWorld, Baristas, Piramyd and Globus are

laying major emphasis & investing heavily in store design.

Emergence of discount stores: They are expected to

spearhead the organised retailing revolution. Stores trying to

emulate the model of Wal-Mart. Ex. Big Bazaar, Bombay

Bazaar, RPGs.

Unorganized retailing is getting organized: To meet the

challenges of organized retailing such as large cineplexes,

and malls, which are backed by the corporate house such as

'Ansals' and 'PVR the unorganized sector is getting

organized. 25 stores in Delhi under the banner of Provision

mart are joining hands to combine monthly buying. Bombay

Bazaar and Efoodmart formed which are aggregations of

Experimentation with formats: Retailing in India is still

evolving and the sector is witnessing a series of experiments

across the country with new formats being tested out. Ex.

Quasi-mall, sub-urban discount stores, Cash and carry etc.

Store design : Biggest challenge for organised retailing to

create a customer-pull environment that increases the

amount of impulse shopping. Research shows that the

chances of senses dictating sales are upto 10-15%. Retail

chains like MusicWorld, Baristas, Piramyd and Globus are

laying major emphasis & investing heavily in store design.

Emergence of discount stores: They are expected to

spearhead the organised retailing revolution. Stores trying to

emulate the model of Wal-Mart. Ex. Big Bazaar, Bombay

Bazaar, RPGs.

Unorganized retailing is getting organized: To meet the

challenges of organized retailing such as large cineplexes,

and malls, which are backed by the corporate house such as

'Ansals' and 'PVR the unorganized sector is getting

organized. 25 stores in Delhi under the banner of Provision

mart are joining hands to combine monthly buying. Bombay

Bazaar and Efoodmart formed which are aggregations of

Recent changes:Recent changes:

Recent Trends contd.


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Recent Trends contd.y Multiple drivers leading to a consumption boom:

y Favorable demographics

y Growth in income

y Increasing population of women

y Raising aspirations : Value added goods sales

y Food and apparel retailing key drivers of growth

yOrganized retailing in India has been largely an urban phenomenon with affluent classes and growingnumber of double-income households.

y More successful in cities in the south and west of India. Reasons range from differences in consumer buyingbehavior to cost of real estate and taxation laws.

y Ruralmarkets emerging as a huge opportunity for retailers reflected in the share of the rural marketacross most categories of consumption

y ITC is experimenting with retailing through its e-Choupal and Choupal Sagar rural hypermarkets.

y HLL is using its Project Shakti initiative leveraging women self-help groups to explore the ruralmarket.

y Mahamaza is leveraging technology and network marketing concepts to act as an aggregator and servethe rural markets.

y IT is a tool that has been used by retailers ranging from Amazon.com to eBay to radically change buyingbehavior across the globe.

y e-tailing slowly making its presence felt.

y Companies using their own web portal or tie-sups with horizontal players like Rediff.com and

Indiatimes.com to offer products on the web.


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Major Retailersy Indias top retailers are largely

lifestyle, clothing and apparel

stores

y This is followed by grocery

stores

y Following the past trends and

business models in the west

retail giants such as Pantaloon,

Shoppers Stop and Lifestyle are

likely to target metros and small

cities almost doubling their

current number of stores

y These Walmart wannabes have

the economy of scale to be low

medium cost retailers pocketing

narrow margin

Leading Retailers


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India vs. Worldy

Indian retail is fragmented with over 12 million outlets operating in the country. This is in comparisonto 0.9 million outlets in USA, catering to more than 13 times of the total retail market size as comparedto India

y India has the highest number of outlets per capita in the world - widely spread retail network but withthe lowest per capita retail space (@ 2 sq. ft. per person)

y Annual turnover of Wal-Mart (Sales in 2001 were $219 billion) is higher than the size of Indian retailindustry. Almost 100 times more than the turnover ofHLL (India's largest FMCG company).

y Wal-Mart - over 4,800 stores (over 47 million square meters) where as none of India's large format store

(Shoppers' Stop, Westside, Lifestyle) can compare.y The sales per hour of $22 million are incomparable to any retailer in the world. Number of employees in

Wal-Mart are about 1.3 million where as the entire Indian retail industry employs about three millionpeople.

y One-day sales record at Wal-Mart (11/23/01) $1.25 billion - roughly two third ofHLL's annual turnover.

y Developed economies like the U.S. employ between 10 and 11 percent of their workforce in retailing(against 7 percent employed in India today).

y

60% of retailers in India feel that the multiple format approach will be successful here whereas in US 34of the fastest-growing 50 retailers have just one format

y Inventory turns ratio: measures efficiency of operations. The U.S. retail sector has an average inventoryturns ratio of about 18. Many Indian retailers KPMG surveyed have inventory turns levels between 4 and10.

y Global best-practice retailers can achieve more than 95 percent availability of all SKUs on the retailshelves (translating into a stock-out level of less than 5 %).The stock-out levels among Indian retailerssurveyed ranged from 5 to 15 percent.


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Future direction: Positives

y AT Kearney has estimated Indias total retail market at US$ 202.6 billion which is expected to growat a compounded 30 per cent over the next five years.

y

With the organised retail segment growing at the rate of 25-30 per cent per annum, revenues fromthe sector are expected to triple from the current US$ 7.7 billion to US$ 24 billion by 2010.y The share of modern retail is likely to grow from its current 2 per cent to 15-20 percent over the next

decadey Over next two years India will see several Indian retail businesses attaining a critical mass as growth

in the industry picks up momentum driven by two key factors:y Availability of quality real estate and mall management practicesy Consumer preference for shopping in new environments

y Wal-Mart : huge plans for India. Moving a senior official from its headquarters in Bentonville,Arkansas, to head its market research and business development functions pertaining to its retail

plans in India.y New York-based high-end fashion retailer Saks Fifth Avenue has tied up with realty major DLF

Properties to set up shop in a mall in New Delhi.y TommyHilfiger, retailer of apparels, expects to open one store each in Delhi, Ahmedabad, Lucknow

and Bangalore in the next four months.


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Future direction: Concernsy 68 million square feet of mall space is expected to be available by end of 2007, which might lead

to over-capacity of malls

y Lack of differentiation among the malls that are coming up. One option may be to look atspecialization.

y Poor inventory turns and stock availability measures - retailers clearly need to augment theiroperations.

y Operations of retailers and suppliers are not integrated. Efficient replenishment practicespracticed in the Indian auto and auto-component industry can be leveraged to implementefficient supply chain management techniques.

y Supplier maturity, in terms of adherence to delivery schedules and delivering the quantityordered, is an issue

y Sales tax laws - lead to retailers having state-level procurement and storage leads to Indianretailers having higher inventories. VAT has helped alleviate this a bit.

y Increased adoption of IT and shrinkage management will be a critical area.

y Supply chain and customer relations followed by merchandising, facilities management andvendor development are areas which have significant gaps and proactive training is a keyimperative for overcoming these.


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y Wal-Mart recently announced it would jump into the appliance business, acategory that has historically been considered a difficult business fortraditional discount retailers. Despite the prerequisites of high square footage,

product service and knowledge, delivery and low margins, Wal-Mart obviouslybelieves there is opportunity and will once again counter conventional retailwisdom.

y In the age of proprietary brands, Wal-Mart, which garnered a cult following ofsorts for its Sam's Choice sodas and cookies as well as Old Roy pet foods, willchallenge the palates of the nation's wine enthusiasts with its own collection of

wines to be known as Alscott Vineyards.y Home Depot, which has pushed the parameters of its basic DIY business with

design experts, installation options, and home delivery, is now offering homeimprovement loans of up to $30,000 in its stores and on line.

y Sears, which keeps on testing new ideas but seldom gets recognized for itsefforts, has debuted several new refinements to its new store prototypes which

reflect more mass merchant characteristics than department store flourishes.The retailer created a computer center where consumers may read their email,take computer classes, prepare presentations, print digital photos and fax orscan materials. In addition, to enhance the customers shopping experience andexploit the Starbucks coffee phenomenon, Sears is testing Cafe Roebuck inseveral of its new stores.


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y Sam's Club, taking a page from the catalog side of Sears, continues to

expand its merchandise offerings beyond the concrete floor and

treasure-hunt atmosphere of its clubs, with specialty catalogs. Sam's

now offers four editions: Child Care Catalog, Office Furniture,

Domestics Collection and Vending Catalog. AHoliday Gift catalog will

also be released later this month.

y Lowe's has found a niche, as have other retailers, in developing a side

business in food service. The home improvement retailer is continuing

to expand its relationship with food kiosk operator Dominic's of New

York. The miniature kiosk is now operating in front of more than 40Lowe's stores offering a limited quick service menu featuring freshly-

made sausage, steak and chicken sandwiches.

y Toys "R" Us, which acquired the mall-based Imaginarium chain last

year, is rolling out the concept as a store-within-a-store format.


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y Barnes & Noble, which acquired Babbages earlier this year, is hoping to build a side

business in games as it did in music and coffee. The retailer is planning a test that willfeature an electronic games store-within-a-store in its traditional book stores.

y These are just some examples of initiatives that retailers are pursuing in order to

capitalize on consumer trends and differentiate their concepts in the marketplace. They

are also examples of the continued blurring of retail as well as alliances with non-

traditional partners.

y One can argue, and have some fun doing so, about whether some of these efforts make

strategic sense or not.

y But one fact is certain: These types of efforts will only continue as retailers are more

willing than ever to embrace change in search of growth and prosperity in a cutthroat

marketplace.


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SourcesyAT Kearny

y Forrester Research 2006

y KPMG-FICCI Reporty http://www.indiainbusiness.nic.in/

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Retail India Ppt