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Major Retail segments• Food and grocery• Clothing, Textile & Fashion accessories• Jewellery• Watches• Footwear• Health & Beauty care services• Consumer durables• Mobile handsets & accessories• Furniture & Furnishings• Catering services• Books, Music & Gifts• Entertainment• Financial services and Banking
Two-faced Indian Consumers…• Seeking upgradation in some categories & value in the others!• Key issue for any retailer is to identify the “upgrades” and
“value-focused” product categories to rationalize the product mix and maintain healthy margins
Consumer SpendsConsumer SpendsGroceryApparel
Eating Out
Upgrading
Mobile phonesHousing
AutomobilesDurablesEducation
Seeking cheaper options
Key Players – Indian Retail• Shopper’s Stop, • FoodWorld, • Vivek’s, • Nilgiris, • Future Group• Subhiksha, • Ebony,• Crosswords,• Lifestyle,• Globus, • Barista, • Qwiky’s, • Café Coffee Day, • Wills Lifestyle, • Titan, • Raymond, • Bata • Westside. • Reliance retail (Fresh & Mart)• Aditya birla group• Heritage fresh @ location
International Players in Indian Retail
• McDonald’s • Pizza Hut• Dominos • Gautier• Levis• Lee• Nike• Adidas, • Bennetton• Swarovski’s• Sony • Sharp • Kodak• The Medicine Shoppe
Introduction to RetailingS.PRASANNA VENKATESH
Current Policy on FDI
Introduction to RetailingS.PRASANNA VENKATESH
Present FDI regime and entry routes:
Allows India to have a presence of international brands, through different routes as follows:
Franchise
Joint venture
Manufacturing
Distribution
Cash and carry*
51% FDI is allowed in ‘Single Brand Retail Outlets’
*100% FDI is allowed in Wholesale Trading
Foreign Ownership RestrictionsForeign ownership in retail exist (in the longer term, restrictions are expected to
be removed)
SINGLE-BRAND RETAILER
MULTI-BRAND RETAILER
DEFINITION
Store selling products under a single brand name, e.g., a vertically integrated specialty apparel retailer
Store selling products under multiple brand names, e.g.,
• Supermarket• Hypermarket • Drug store • Department
store • Multi-brand
consumer electronics retailer
EXAMPLE
The Gap IkeaGucci TiffanyThe Body Shop
Carrefour CostcoWalgreen'sMacy'sHome DepotBest Buy
RESTRICTION
Foreign companies
allowed to own at most 51%
Foreign companies not allowed to own any equity
POTENTIAL SOLUTIONS
Licensing / franchising
Joint venture with: Strategic partner Private equity
Traditional licensing / franchising
“Hybrid” licensing / franchising: Overseas company owns and operates a business that performs key functions such as warehousing, distribution, store fit-out, sourcing and product development; Indian partner operates stores
Wholesale-only business (selling to small businesses, not consumers), e.g., club store / cash and carry format
Source: Technopak Advisors; KSA analysis
Challenges of Indian Retailing• Shortage of talents – Middle management• Efficiency of Supply chain management• Fraud and Theft in Indian retailing• Infrastructural bottlenecks• Low adoption and use of Technology• Regulatory implications• Rise in Fuel prices• Supplier maturity and relations• Disparities in culture and taste• Real estate costs
List of a few licenses required for opening a 50000 sq.ft.retail store!1 Shops & Establishments - Registration certificate , Trade License
2 Labour
3 Weights and Measures
4 Liquor
5 Chemist
6 Pollution Control
7 Generator / Electricity Board Clearence
8 Traffic Police Clearance
9 Contractor for Labour
10 Hoarding/ Outdoor media / Signages
11 Airport Authority - if tall building
12 Entertainment - from Police authorities if medium sized entertainment
13 Health - Health Deptt
14 Fire
15 Food license if ready-to-eat food items are sold and consumed Eg. bakery
16 Water & Drainage
17 Sales Tax - Central & State
18 Excise Registration
19 Import License (Import/Export Code Number)
20 Patents & Trade Marks
21 PF Registration
22 ESI Registration
23 Transportation Permits (Octroi)
24 APMC licence for commodities
25 Music software license for playing music in store
Introduction to RetailingS.PRASANNA VENKATESH
Economic Significance of Retailing in India
• Fifth most attractive emerging retail market• Estimation of market size : US $ 350 billion• First rank in Retail development index by AT
Kearney• Employment opportunities – 17%• Creates more demand for consumer goods and
services.• Improving the standard of living and overall
economy
Retail as a career
• Buying and Merchandising• Marketing• Store operations• Sales• Finance• Human Resources• Technology and E-Commerce• Visual Merchandising• Supply chain management & Logistics
Global Trends by Category of Retailers
• Luxury• Grocery / food and drink• Clothing / Footwear / accessories• Electrical / computing / phone• Furniture / Textiles• Books / Music / DVDs• Departmental stores
Global Retail Development Index - 2009
Top attractive countries1. India2. Russia3. China4. United arab emirates5. Saudi arabia6. Vietnam7. Chile8. Brazil9. Slovenia10. Malaysia
Parameters for Ranking• Country risk• Market attractiveness• Market saturation• Time pressure
Global Retail Development Index - 2009
Top attractive countries1. India2. Russia3. China4. United arab emirates5. Saudi arabia6. Vietnam7. Chile8. Brazil9. Slovenia10. Malaysia
Parameters for Ranking• Country risk• Market attractiveness• Market saturation• Time pressure
Assignment – Last date on or before 18th April 2010, 5 pm.
Assignment Content• Segment Profile – Overview• Market size and economic
contribution• Product and service profile• Indian Major players in the
segment• Consumer mindset and
purchase habits towards this category.
• Future outlook
Assignment Execution• 3 members in each team• 13 retail segment