Presentation on
Indian Food RetailTrends & Tasks
by
Anand KumarJU07019
NSB School of BusinessNew Delhi
2India Food Retail: Trends & Tasks
We will talk about…
• Retailing in India – Indian economic snapshot– Retailing– Food retailing
• Trends– Evolving consumer preferences– Consumption shift– Drivers
• Tasks– Hurdles– Tasks for suppliers
• Reliance Industries Snapshot
3India Food Retail: Trends & Tasks
Happening times !
• Indian GDP growth at 9.4 % for 2006-07 is the highest in 18 years
• Analysts across the globe find Indian growth sustainable
• Economic outlook for India is positive
• Indian working population is confident
Source: Indian Express
4India Food Retail: Trends & Tasks
India is growing !
• India will be the third largest economy by 2040• India will be the 5th largest consumer market by 2025
Source: Economist
5India Food Retail: Trends & Tasks
Most attractive retail market !
India’s retail market has grown by 10% on average for past 5 years…steadily rising to top position in GRDI
Source: AT Kearney Global Retail Development Index (GRDI)
6India Food Retail: Trends & Tasks
Organized retail is still in its infancy !
• With just 2 % organized retail …….India is a big opportunity
Source: JM Morgan Stanley
7India Food Retail: Trends & Tasks
With robust economy, sustained GDP growth and booming stock exchange, there are several emerging sectors in India waiting to be tapped . . .
…Organized Retail is at the forefront of these opportunities
Organized Retailing is big opportunity !
8India Food Retail: Trends & Tasks
Growth in Organized Retail
• India is in 2nd phase of retail growth• Increasing Range, Portfolio and Format options• Food retailing leads the growth in Indian organized retail
Source: Ernst & Young
9India Food Retail: Trends & Tasks
Food is the largest segment in Retail !
• At 77 % Food & Grocery is the largest segment in Retail sales
Source: Ernst & Young
Source: KPMG
10India Food Retail: Trends & Tasks
Food Retail Sales in India
• Total food sales to cross US$ 250 billion by 2008
11India Food Retail: Trends & Tasks
Modern formats in Food Retailing is low !
• Lowest among major retail markets...…But growing due to evolving consumer preferences
12India Food Retail: Trends & Tasks
Indian consumers are evolving…• From traditional to…
… modernized traditional• From globalize to…
… Indianise
• From functional to…
… lifestyle
Evolving consumer preferences !
13India Food Retail: Trends & Tasks
Indian consumers are evolving…• From value for money to…
… value for time and convenience• From cautious to…
… experimentation• From over-the-counter to…
… touch-and-feel
Evolving consumer preferences !
14India Food Retail: Trends & Tasks
Consumption shift !
• Beverages Rise in coffee drinkers More fruit drinks and bottled water Wines and Liquor sales on rise
• Processed food consumption Increasing ready to eat food Growing premium foods Increasing private label From “packaged as stale” to “packaged is hygienic and high quality” Increased tendency towards disposability Shift from price consideration to design and quality
15India Food Retail: Trends & Tasks
Consumption shift !
• Lifestyle Frequent eating out Growing health and dietary supplements Growing organic produce Greater focus on looking and feeling good
Source: AT Kearney
16India Food Retail: Trends & Tasks
Drivers of this shift !
• Demographic advantage : Young population
17India Food Retail: Trends & Tasks
Drivers of this shift !
• Increasing discretionary income
18India Food Retail: Trends & Tasks
Drivers of this shift !
• Increasing retail space
• Credit availability is also fuelling this shift
19India Food Retail: Trends & Tasks
Still there are hurdles !
Local and Global players’ concerns
• ‘Unorganized’ sector
• Nascent Supply Chain
• Low Technology Penetration
• Infrastructure
• Bureaucracy
…work with these profitably by focusing
on following tasks…
20India Food Retail: Trends & Tasks
Tasks for suppliers !
Most important task
Understand consumers
• 29 States + 6 Union Territories Even within each state,
tremendous diversity in customs, traditions, attitudes
• 22 official languages and 1600 minor languages and dialects
• 70% Rural population – India lives in its 600,000 + villages ( < 20,000 population) However, accounts for more than
half of sales of many FMCG and Consumer Durable products
• 35% still illiterate, not accessible by mainstream media
• India is a not a homogenous market
21India Food Retail: Trends & Tasks
Tasks for suppliers ! Innovate & invest
• Products– Not just customize but Indianize
» McDonalds and Pizza Hut
– Processing» Nestle
• Marketing– Market research– Advertising
» Coca Cola and Pepsi
– Encourage experiments» Kellogg’s
• Distribution – Packaging
» Sachets & Smaller pack sizes
– Channels / Network» Frito Lays and Anheuser-Busch
22India Food Retail: Trends & Tasks
Tasks for suppliers !
New agriculture supply chain is emerging India removing non-value adding intermediaries
Partnership with value adding intermediaries of the supply chain
• Technology transfer• Streamline processes• Maintain Quality
23India Food Retail: Trends & Tasks
Tasks for suppliers !
Participate in Agri Infrastructure: Logistics
24India Food Retail: Trends & Tasks
Tasks for suppliers !
Participate in agri related activities
25India Food Retail: Trends & Tasks
Tasks for suppliers !
Focus on emerging markets (Tier 3 and 2 cities)
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Tasks for suppliers !
Tap the rural retail market
• Rural India consists of 720 Million consumers across 627,000 villages
– 17% of these villages account for 50% of the rural population and 60% of the rural wealth
– Extensive reach is required as to cover 50% market 100,000 villages must be catered
– Immense opportunity amounting to US$ 125 billion
• Rural Retail is growing @ 7% p.a.• Rural consumption is also shifting from basic
food grains to fruits, vegetables, dairy and poultry products, as well as beverages
• Demand for better quality food leading to huge demand for basic foods
27India Food Retail: Trends & Tasks
Tasks for suppliers !
All these can be done only if you …
Establish franchisee Forge joint ventures Licensing agreement Strategic partnerships Explore other avenues
… Act & Join !
28India Food Retail: Trends & Tasks
• Revenues US$ 19.9 billion• Cash Profit US$ 2.9 billion• Net Profit US$ 2 billion• Total Assets of US$ 20.8 billion
India and Reliance• Revenues equivalent to 2.8% of India’s GDP• 8.2% of India’s total exports• Contributing 8% India’s indirect taxes• 4.7% of the total market capitalization• 11.5% weightage in Bombay Stock Exchange Sensex
• 9.3% weightage in National Stock Exchange Sensex
US$ 20 billion enterprise created in 30 years
Reliance: Contribution to Indian Economy
29India Food Retail: Trends & Tasks
Global Rank
Net Sales 342Net Profit 194
Net Worth 226Assets 351
Amongst the fastest 25 growing companies in Fortune 500
India’s only private sector company to list in fortune global 500 list
111906
75
Reliance: Global Ranks
30India Food Retail: Trends & Tasks
Reliance: Recent Major Initiatives
Exploration & Production
Refinery – Jamnagar
Special Economic Zones
Reliance Retail
31India Food Retail: Trends & Tasks
To be the most admired and successful organized retail company in India that materially enhances the quality of life of every Indian
By Providing unprecedented affordability, quality and choice Being the partner of choice in creating prosperity for Indian farmers
and other vendor partners Unleashing the power of the Indian workforce through the
generation of new & attractive employment opportunities
Reliance: Retail Vision
Thank you !