ORGANIZED RETAIL Presented by:

Suvransu Chakraborty Syed Shamsuddin

Trinanjan Datta

Introduction

• Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser

• It can also be defined as the timely delivery of goods and services demanded by consumers at prices that are competitive and affordable.

• One of the world’s largest industry exceeding US $ 9 trillion.

• Total retail contribution in World GDP is 27%. Organized retail in US accounts for 22% of GDP. The Share of organized retail in developing markets ranges between 20% to 55%

• Dominated by developed countries. US, EU & Japan constitutes 80% of world retail sales.

Introduction : Organized Retail

• Organized retail or modern retail is usually chain stores, all owned or franchised by a central entity, or a single store that is larger than some cut-off point.

• The relative uniformity and standardization of retailing is the key attribute of modern retail.

• Organized retailing, in India, refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the publicly traded supermarkets, corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses.

Difference in Organized and unorganized retail.

Organized Retail in India• The organized retail market is growing at 3.5 percent annually. Rapid change with

investments to the tune of US$25 billion is being planned by several Indian and multinational companies in the next 5 years.

• It is huge industry in terms of size and according to management consulting firm Techno Park Advisors Pvt. Ltd., it is valued at above US$ 350 Billion.

• According to the tenth report of Global retail Report Index (GRID) of AT Kearney, India is having a very favorable retail environment and it is placed at 4th spot in the GRDI. The main reasons behind that is the 9% real GDP growth in 2010, forecasted yearly growth of

8.7% through 2016, high saving and investment rate and increased consumer spending.

• According to report, organized retail accounts for 7% of India’s roughly $435 billion retail market and is expected to reach 20% by 2020.

Organized Retail in India

Investment ScenarioThe Indian retail trading has received Foreign Direct Investment (FDI) equity inflows totaling US$ 537.61 million during April 2000–March 2016, according to the Department of Industrial Policies and Promotion (DIPP).

• International Finance Corporation (IFC), the investment arm of The World Bank, plans to invest up to Rs 134 crore (US$ 19.86 million) in Kishore Biyani's Future Consumer Enterprises Ltd, which is expected to aid the company in driving its growth plans.

• IKEA, the world’s largest furniture retailer, plans to invest Rs 10,500 crore (US$ 1.56 billion) to set up 25 stores across India and hire over 15,000 permanent employees and 37,500 temporary employees to assist in running its stores.

• Walmart India plans to add 50 more cash-and-carry stores in India over the next four to five years.

• Aditya Birla Retail, a part of the US$ 40 billion Aditya Birla Group and the fourth-largest supermarket retailer in the country, acquired Total hypermarkets owned by Jubilant Retail.

• US-based Pizza chain Sbarro plans an almost threefold increase in its store count from the current 17 to 50 over the next two years through multiple business models.

Government Initiatives

The Government of India has taken various initiatives to improve the retail industry in India.• Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in online retail

of goods and services through the automatic route, thereby providing clarity on the existing businesses of e-commerce companies operating in India.

• The Government of India has accepted the changes proposed by Rajya Sabha select committee to the bill introducing Goods and Services Tax (GST). Implementation of GST is expected to enable easier movement of goods across the country, thereby improving retail operations for pan-India retailers.

• IKEA, the world’s largest furniture retailer, bought its first piece of land in India in Hyderabad, the joint capital of Telangana and Andhra Pradesh, for building a retail store. IKEA’s retail outlets have a standard design and each location entails an investment of around Rs 500–600 crore (US$ 74–89 million).

Benefits• Organized retail will bring in massive employment in organized sector with

benefits to locals (China experienced employment growth rates of 9 million over 3 years) albeit with changed skill sets.

• Massive Infrastructure up-gradation will come in increasing the overall efficiency in the economy, which will reduce the current huge amounts of wastage occurring to the economy.

• Increased tax revenues and profits retained within the country for local portion. History in other countries negates critics

• Will benefit end consumers in the area of price, convenience & quality of products & packaging.

The Road Ahead

• E-commerce is expanding steadily in the country. Customers have the ever increasing choice of products at the lowest rates.  • Both organized and unorganized retail companies have to

work together to ensure better prospects for the overall retail industry, while generating new benefits for their customers.• Nevertheless, the long-term outlook for the industry is

positive, supported by rising incomes, favorable demographics, entry of foreign players, and increasing urbanization.

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