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18659470 Indian Retail Sector

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  • 8/9/2019 18659470 Indian Retail Sector


    The Indian Retail Sector

  • 8/9/2019 18659470 Indian Retail Sector


    Industry Evolution

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


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

    !""#s e$perienced slo% change as India began to open up economy Te$tiles sector %ith companies li'e (ombay )yeing* +aymond,s* - Kumar,s and

    .rasim first sa% the emergence of retail chains /ater Titan successfully created an organi0ed retailing concept and established a

    series of sho%rooms for its premium %atches The latter half of the !""#s sa% a fresh %ave of entrants %ith a shift from

    1anufactures to 2ure +etailers 3or eg 3ood 4orld* -ubhi'sha and 5ilgiris in food and 31.6 2lanet 1 and 1usic

    4orld in music6 ross%ord and 3ountainhead in boo's

    2ost !""7 on%ards sa% an emergence of shopping centers* mainly in urban areas* %ith facilities li'e car par'ing targeted to provide a complete destination e$perience for all segments of

    society Emergence of hyper and super mar'ets trying to provide customer %ith 8 Vs 9 Value*

    Variety and Volume E$panding target consumer segment: The -achet revolution 9 e$ample of reaching to

    the bottom of the pyramid t year end of ;##< the si0e of the Indian organi0ed retail industry is estimated at +s

    7#*### crore plus

  • 8/9/2019 18659470 Indian Retail Sector



    India is 10thlargest economy in theworld.Realestate sector growing 23%PA

    The top 6 cities D!"#$ represent 6% opop&lation and contri'&te 1(% re)en&es*whilethe rest o the cities with +% pop&lationcontri'&te only 13% re)en&e.

    Tier II cities and towns li,e-&rat*i/ayawada*#hopal*#h&'aneswar isepected to grow at 20%.

  • 8/9/2019 18659470 Indian Retail Sector



    The tenants in malls in India ace high lease rentalsand payment o high costs towards common areamaintenance which aects retailer proita'ility.

    $owe)er there are some pec&liarities o the indianmar,et that need to 'e &nderstood.A simpleapplication o western retail ormats may not really'e rele)ant to the indian contet.

    Distri'&tion o all -paces across onesorthone435%*estone433%*-o&thone417% and 8astone410%.

  • 8/9/2019 18659470 Indian Retail Sector


    Retailing or!ats in India


    The largest orm o organied retailing today. 9ocated mainly in metrocities* in proimity to &r'an o&ts,irts. Ranges rom 60*000 s: t to+*00*000 s: t and a'o)e. They lend an ideal shopping eperiencewith an amalgamation o prod&ct* ser)ice and entertainment* all &ndera common roo.8amples incl&de -hoppers -top* Piramyd*Pantaloon.

    S#ecialty Stores"

    !hains s&ch as the #angalore 'ased "ids "emp* the &m'ai 'oo,sretailer !rossword* RP;

  • 8/9/2019 18659470 Indian Retail Sector


    Retailing or!ats in India

    India)s nu!*er o Do!estic grocery chains and Early +oreign Entrants

  • 8/9/2019 18659470 Indian Retail Sector


    Recent Trends

    Retailing in India is witnessing a h&gere)amping eercise as can 'e seen inthe graph

    India is rated the ith most attracti)eemerging retail mar,et a potentialgoldmine.

    8stimated to 'e -E 200 'illion* owhich organied retailing @i.e. moderntrade ma,es &p 3 percent or -E 6.('illion

    As per a report 'y "P; the ann&algrowth o department stores isestimated at 2(%

    Ran,ed second in a ;lo'al RetailDe)elopment Inde o 30 de)elopingco&ntries drawn &p 'y AT "earney.

    Retail Sales in India

  • 8/9/2019 18659470 Indian Retail Sector


  • 8/9/2019 18659470 Indian Retail Sector


    Recent Trends contd0

    &ltiple dri)ers leading to a cons&mption 'oomK ?a)ora'le demographicsK ;rowth in incomeK Increasing pop&lation o womenK Raising aspirations al&e added goods sales

    Food and apparel retailing key drivers of growth

    Lrganied retailing in India has 'een largely an &r'an phenomenon with al&ent classes and growing n&m'ero do&'le4income ho&seholds. ore s&ccess&l in cities in the so&th and west o India. Reasons range rom dierences in cons&mer '&ying

    'eha)ior to cost o real estate and taation laws. R&ral mar,ets emerging as a h&ge opport&nity or retailers relected in the share o the r&ral mar,et across

    most categories o cons&mptionK IT! is eperimenting with retailing thro&gh its e4!ho&pal and !ho&pal -agar K r&ral hypermar,ets.K $99 is &sing its Pro/ect -ha,ti initiati)e K le)eraging women sel4help gro&ps K to eplore the r&ral mar,et.K ahamaa is le)eraging technology and networ, mar,eting concepts to act as an aggregator and ser)e

    the r&ral mar,ets.

    IT is a tool that has 'een &sed 'y retailers ranging rom Amaon.com to e#ay to radically change '&ying'eha)ior across the glo'e. Je4tailingM slowly ma,ing its presence elt. !ompanies &sing their own we' portal or tie4s&ps with horiontal players li,e Redi.com and Indiatimes.com to

    oer prod&cts on the we'.

  • 8/9/2019 18659470 Indian Retail Sector


    Ma1or Retailers

    IndiaMs top retailers are largelyliestyle* clothing and apparelstores

    This is ollowed 'y grocerystores

    ?ollowing the past trends and'&siness models in the westretail giants s&ch asPantaloon* -hoppersM -topand 9iestyle are li,ely totarget metros and small citiesalmost do&'ling their c&rrentn&m'er o stores

    These almart wanna'es

    ha)e the economy o scale to'e low Kmedi&m cost retailerspoc,eting narrow margin

    9eading Retailers

  • 8/9/2019 18659470 Indian Retail Sector


    India vs0 2orld

    Indian retail is ragmented with o)er 12 million o&tlets operating in the co&ntry. This is in comparison to 0.5million o&tlets in -A* catering to more than 13 times o the total retail mar,et sie as compared to India

    India has the highest n&m'er o o&tlets per capita in the world 4 widely spread retail networ, '&t with thelowest per capita retail space @N 2 s:. t. per person

    Ann&al t&rno)er o al4art @-ales in 2001 were E215 'illion is higher than the sie o Indian retailind&stry. Almost 100 times more than the t&rno)er o $99 @India %.The stoc,4o&t le)els among Indian retailerss&r)eyed ranged rom > to 1> percent.

  • 8/9/2019 18659470 Indian Retail Sector


    +uture direction" Positives

    AT "earney has estimated IndiaMs total retail mar,et at -E 202.6 'illion which is epected togrow at a compo&nded 30 per cent o)er the net i)e years.

    ith the organised retail segment growing at the rate o 2>430 per cent per ann&m* re)en&esrom the sector are epected to triple rom the c&rrent -E +.+ 'illion to -E 2( 'illion 'y 2010.

    The share o modern retail is li,ely to grow rom its c&rrent 2 per cent to 1>420 percent o)er thenet decade

    L)er net two years India will see se)eral Indian retail '&sinesses attaining a critical mass asgrowth in the ind&stry pic,s &p moment&m dri)en 'y two ,ey actors

    K A)aila'ility o :&ality real estate and mall management practicesK !ons&mer preerence or shopping in new en)ironments

    al4art h&ge plans or India. o)ing a senior oicial rom its head:&arters in #enton)ille*

    Ar,ansas* to head its mar,et research and '&siness de)elopment &nctions pertaining to itsretail plans in India. ew Oor,4'ased high4end ashion retailer -a,s ?ith A)en&e has tied &p with realty ma/or D9?

    Properties to set &p shop in a mall in ew Delhi. Tommy $iliger* retailer o apparels* epects to open one store each in Delhi* Ahmeda'ad*

    9&c,now and #angalore in the net o&r months.

  • 8/9/2019 18659470 Indian Retail Sector


    +uture direction" 'oncerns

    67 million s:&are eet o mall space is epected to 'e a)aila'le 'y end o 200+* which might leadto o)er4capacity o malls

    9ac, o dierentiation among the malls that are coming &p. Lne option may 'e to loo, atspecialiation. Poor in)entory t&rns and stoc, a)aila'ility meas&res 4 retailers clearly need to a&gment their

    operations. Lperations o retailers and s&ppliers are not integrated. 8icient replenishment practices practiced

    in the Indian a&to and a&to4component ind&stry can 'e le)eraged to implement eicient s&pplychain management techni:&es.

    -&pplier mat&rity* in terms o adherence to deli)ery sched&les and deli)ering the :&antity ordered*is an iss&e

    -ales ta laws 4 lead to retailers ha)ing state4le)el proc&rement and storage leads to Indianretailers ha)ing higher in)entories. AT has helped alle)iate this a 'it. Increased adoption o IT and shrinkage management will be a critical area. -&pply chain and c&stomer relations ollowed 'y merchandising* acilities management and

    )endor de)elopment are areas which ha)e signiicant gaps and proacti)e training is a ,eyimperati)e or o)ercoming these.

  • 8/9/2019 18659470 Indian Retail Sector



    AT "earny

    ?orrester Research 2006

    "P;4?I!!I Report http==www.indiain'&siness.nic.in=

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