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CHAPTER 2
RETAIL IN INDIA
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Retail In India: Some Facts &
Figures
India has emerged as the fourth largest
economy in the world in terms ofPurchasing
Power Parity
It is the twelfth largest consumer market in theworld
Almost 21 million people are believed to be
employed in the retail sector, which is 7% ofthe total national workforce
But, retail has not yet been accorded the status
of an industry
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The Concept Of Organised Retail
Unorganised sector- units whose activity is not
regulated by any statute or legal provision,
and/or those which do not maintain regular
accounts Unorganised form of retail - those forms of
trade which sell an assortment of products and
services ranging from fruits and vegetables toshoe repair
Organised form of retail- typically a multi-outlet
chain of stores or distribution centres run by
professional management
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The Evolution Of Retail In India
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Drivers Of Retail Change In
India
Socio-economic factors
Changing income profiles
The age factor
The changing role of women and the evolving
family structure
The changing consumption basket
Increased credit friendliness
Geographical dispersion of market potential
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The Size Of Retail In India
Segment Composition Size (Rs.) Key players
Food and Grocery Fresh groceries, branded
packaged foods, personal
hygiene products and toiletries
and dry unprocessed groceries
Total-1200,000 crore
Organised- 5000 crore
Food Bazaar, Subhiksha,
Reliance Fresh
Food Services Fast Food, cafes, restaurants,
locations offering cateringservices
Total-57,000 crore
Organised- 3,940 crore
McDonalds, KFC, Jumbo King,
Barista, Caf Coffee Day
Clothing & Textiles Fabric manufacturers and
readymade garments
Total-113,500 crore
Organised- 21,400 crores
Arvind Brands, Madura
Garments, Raymonds, Park
Avenue
Consumer Durables Televisions, refrigerators,
washing machines, air
conditioners and microwaves
Total-41,500 crore
Organised- 4,300 crore
Strong regional players-
Videocon Plaza, BPL Gallery,
Vijay Sales
Footwear Footwear for men, women and
children
Total-13,750 crore
Organised- 5200 crore
Bata, Metro Shoes, Lakhani,
Adidas , Reebok
Jewellery Mainly, Gold Jewellery &
diamonds
Total-52,000 crore
Organised- 1,450 crore
Tanishq, Gili
Books, Music and Gifts Various Books, Music and Gifts Total-11,500 crore
Organised- 1,450 crore
Land Mark, Crossword,
Higginbothams, Oxford Bookstore
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Rural Realities: Beyond Urban
Boundaries
What is rural?
- Any habitation where the population density is less than 400 per
sq.km
- Where at least 75 per cent of the male working population is
engaged in agriculture- Where there isnt any municipality on board
Rural Retail opportunities
- Spurt in the purchasing capacity of farmers- Marketable surplus of farm produce
- High incomes combined with low cost of living
- Consists of approximately 128 million households
Current key players- ITC- e-choupal, Hariyali Kisan Bazaars
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Foreign Direct Investment In Retail
IMF-OECD
Glossary of
FDI terms
and
definitions
Foreign direct investment reflects the objectiveof obtaining a lasting interest by a residententity in one economy (direct investor) in an
entity resident in an economy other than that of
the investor (direct investment enterprise).The lasting interest implies the existence of along-term relationship between the directinvestor and the enterprise and a significantdegree of influence on the management of the
enterprise. Direct investment involves both theinitial transaction between the two entities andall subsequent capital transactions betweenthem and among affiliated enterprises, bothincorporated and unincorporated."
In short, FDI is a method of allowing external
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In India, FDI in retail is not allowed
An international retailer can enter the Indian
retail market through-
Hi-Tech items/ items requiring specialized aftersales service
Social sector items
Medical and diagnostic items Items sourced from the Indian small sector
Two-year test marketing
Foreign Direct Investment In Retail
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Challenges To Retail Development In
India
Lack of recognition as an industry
High costs of real estate
Very high stamp duties on transfer of property
Lack of adequate infrastructure
Multiple and complex taxation system
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Potential
Entrants
Substitutes
Suppliers Buyers
Industry
Competitors
Rivalry among
existing firms
Source: Competitive Strategy, Michael
Porter, pg 4
Bargaining
power of
suppliers
Threat of new
entrants
Threat of substitute
products orservices
Bargaining
power of buyers
Five Forces Of Competition