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The Retail Niche in India RAMMS INDIA
| Date post: | 08-May-2015 |
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The Retail Niche in India
RAMMS INDIA
PERCEPTION
REALITY
Interesting facts on
retail
• Every 10th billionaire is a retailer.
• 25 of the top 50 Fortune 500 companies are in Retail.
• In India the Retailing Industry provides employment to over 18 m people, second largest after agriculture.
• 1 out of every 25 families in India are engaged in the business of retailing
• 72% of Indian population staying in rural market.
• In India Per Capita square feet area under retail is just 2 sq. ft. or 0.2 sq. m.
• Source: CII Conference on Retailing
Note: PDS: Public Distribution SystemSource: Retail in India, ICICI Bank, Feb 2004
Retail in India comprises of four major channels
Penetration of organized retail in India will grow to catch up with other matured markets…
Indian retail story remains intact with strong fundamentals:
Consumer incomes growing
Consumer aspirations rising
Growing urbanization
Still Very Low Penetration of Modern Retail
Growth in Modern retail’s capability to achieve and share efficiencies across the value chain
Economic slowdown/ inflation not crippling the opportunity
$220 BILLION and counting…
Growing at 20% per annum
SOURCE: MCKINSEY REPORT
Retail amongst the largest industries in India,
With over 10% of country’s GDP
& about 8% of employment
12th largest economy in the world
4th largest in purchasing-power parity terms
Over 58% of Indian population
below 26yrs.
That is over 564 million people, nearly twice the total population
of the United States
Indian Retail Scenario Today
Modern Indian Retail Lifecycle
Consumer demandsOrganized forms
2004
SECOND GEAR
2008
New retailersDriving growth
1993
FIRST GEAR
Retailers strengthening Backend
2010
THIRD GEAR
Retailers goingglobal / M&A
2012
FOURTH GEAR
CREATE AWARENESS
INCREASE CLIENTEXPECTATION
STRENGTHEN BACK ENDMANAGEMENT
CONSOLIDATION
SOURCE: KURT SALMON ASSOCIATES
Market & Composition
Total No. of Retail stores in India
12-15 Million
Hawkers
8-10 Million
Grocery Outlets
4-5 Million
Urban Grocery Outlets
1 Million
Over
96% of Indian Retail
is unorganizedSOURCE: CII RETAIL
LARGER MALLS (1M Sq.ft)2004-5
2000 Multiplex & Leisure Cinema
DiscountStores
MALLS
1990 MALLS (Price, Quality, Service & Entertainment)
1980 DEPARTMENTAL STORES (Price, Quality, Service Sensitive)
BEFORE
1980TRADITIONAL RETAIL
(Price Sensitive)
Market & Composition
4% rapidly evolving
modern organized Retail
Characteristics of Unorganized Retail
Retail Products: Mainly Food & Beverage
Products, Staples, Cigarette, Personal Care
Location:Residential Areas, Main Roads
spread across the Indian geography
Typical Size: Over The Counter, Occupies a
space ranging from 100 - 750 sq ft.
Retailer Characteristics:Uneducated
Has loyal Clientele
Retailing Characteristics:
Over the counter sale Space limitation Home delivery
Customer Profile: Lower to upper middle class
OUTLET: Grocers
Mom & Pop Stores
Approx. SIZE: 200- 500 sq ft
Forms of Unorganized Retail
OUTLET:Kiosk store
Approx. SIZE: 40 sq ft
Forms of Unorganized Retail
OUTLET:Street vendors
Approx. Size:30 sq ft
Forms of Unorganized Retail
Shift from Unorganized to Organized self service outlets
Changing Scenario
BEFORE AFTER
Forms of Organized Retail
ANSAL’S PROJECTS
Forms of Organized Retail
ENTERTAINMENT CITY NEW DELHI
Forms of Organized Retail
GOLD SOUK TRIVANDRUM
Large population of young spenders
The shift from buying to the “shopping” experience
Growing finance options
Brand conscious & lifestyle products
The Changing face of the Indian Consumer
Indian Shopping Basket
Brands in India Today
Law & Regulations
Foreign Direct Investment
allows 51% stake in single brands
FDI allows international retailers in
cash & carry (Metro 100%)
This law will be relaxed in the next 3 years Hopefully for gradual increase in ownership stake
International Retailers in IndiaInternational Players Eyeing India
Shoprite South Africa (Hypermarkets) Already in
Landmark, Dubai (Lifestyle stores) Already in
Marks & Spencer’s (Lifestyle stores) Already in
Metro Cash & Carry (Wholesale Hypermarket) Already in
Mango (Apparel Retailer) Already in
Carrefour (Multiformat Retailer) Evaluating
Wal Mart (Hypermarkets)
7-Eleven (Supermarkets) Evaluating
Tesco Evaluating
Starbucks Evaluating
SOURCE: CYGNUS RESEARCH
Major Indian Players
6.7 billion USD invested in setting up multiple retail
Formats. Sales expectation of 20 billion USD by 2010RELIANCE
Presently India’s largest retail company.
10 million sq ft of retail space expansion & expected sales 2 billion $ by 2008
PANTALOON
Opening 50 hypermarkets of 4 million sq ftRPG
Currently operating in lifestyle, books retail
& hypermarkets Investing 100 million dollars
in 55 hypermarkets by 2015
RAHEJAS
Opening 150 lifestyle department stores by 2010PYRAMID
Expanding to 10 to 40 departmental stores by 2010. Also in hypermarkets & consumer
electronic multi brand stores TATA
Current Scenario of Indian retail
Proliferation of modern retail formats
400 new malls
1500 Supermarkets
350Departmental
Stores
50Hypermarkets
by 2008
100 MILLION Sq ft in retail space by 20102
15,000 small & big outlets to undergo facelifts
Opportunities
Mall Management
VisualMerchandizing
& Store /Mall
Planning
RetailEducation
ShopperResearch
RetailTechnology
Signage & Graphics
Opportunities – Signage & Graphics
From 30 to 100 large multi-brand consumer electronics & durables stores
20,000 sft. 6,000 products. 8 categories.INFINITI RETAIL
INVESTMENT: Rs. 275 Cr in retail expansion.
From 42 to over 150 over next 4 years.
Prime strategy: to enter tier-III towns.
FABINDIA
INVESTMENT: Rs. 21 Cr in retail expansion.
1st phase: 30 Disney Jeans Stores by 2007 - 3 each in
Delhi & Mumbai. 2nd phase: 50 stores by 2008.
INDUS CLOTHING
Mike Murjani to set up luxury niche in India with Tommy Hilfiger, Gucci, Jimmy Choo & Tumi.
40 free standing stores planned over 5 years
LUXURY NICHE
SEEKING: 50-20M Million Sft.Set to target 1,500 Indian citiesRELIANCE RETAIL
West Bengal Government to invest
Rs. 100 Cr in vegetable retail chain. RETAIL CHAIN
Opportunities – Mall Management
200 existing malls
400 new malls
65 malls coming up in 1 street:
Gurgaon, a high street near Delhi
Specialized malls:
Car, Jewelry,Weddings
Emerging need for Mall Management Services.
MALL PLANNING
Opportunities – Mall ManagementServices to Mall Developers
MALL DESIGNDEVELOPMENT
MALL FIT OUT &TENANT MIXGUIDELINES
MALL TRAFFICMANAGEMENT
SYSTEM PLANNING
MALL COMMUNICATION
SYSTEM PLANNING
Opportunities – Mall ManagementServices to Retailers
INTEGRATED MARKETINGPROMOTIONS & VM CALENDAR
CUSTOMER EXPERIENCEMANAGEMENT
SERVICES
IN-STORE WAYFINDING &COMMUNICATION
STORE DESIGN &PRESENTATION
Opportunities – Store Design
Existing stores have commonplace designs
Growing popularity of
Experience Shopping
Emerging trend of new store design concepts with international brands
Most new innovations in apparel stores
Indian fashion labels setting up boutique stores
Store fixtures in high demand
Opportunities – Store Design & Build
Store design conversion & adaptation to
International concepts
Store designs for Indian Brands
Shop fitting design & development:
China emerging as source, India: needs to adapt
Opportunities – Visual Merchandizing
VM design, execution
& management for retail chains
VM AcademiaSet-up
Opportunities – Marketing at retail (POP)
POP strategyDesign &
Development
POP Deployment & MaintenanceManagement
International Designers, Architects & Mall Planners in India
JHP LONDONWD PARTNERS
OHIO
HELLMUTH OBATA KASSBAUM
(HOK) Inc. NEW YORK
CHUTE GERDEMENOHIO
SPAR Inc.NEW YORK:IN-STORE
MERCHANDIZING
BENTEL ASSOCIATES,
SOUTH AFRICA
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Scope for Retail Education
8 MillionRetail jobs in
the next
6 years
More than
2 MillionSkilled job
opportunities
by 2008
Need for
quality
education
Retail Training
Increasing ModernRetail
Outlets
100 Million
sq ft
Increasing Demand of
Skilled people
8 Million
Jobs
Huge shortage
of
Skilled people
Retail Training – The Opportunity
Despite perception
of huge people availability
Skilled Peoplein retail is at
premium
Large Indian retailers have
in-housetraining
departments…this whole area
can be
outsourced
Few schools today
have national presence in
Retail Design
National Institute of Design
National Institute of Fashion Design
(affiliated to the Birmingham Institute
of Art & Design)
Retail Design – The Opportunity
Retail Education – The Opportunity
Opening of professional
Retail training academy
National FootprintFor the academy
Training based onGlobal
Practices
InternationalVisitingFaculty
Retail Education – Immediate Opportunities
Real Estate Management
Visual Merchandising Design School
Store Design Institute
Retail Operations Management
Retail Research – The Opportunity
As retail grows the Indian shopper is becoming more and more savvy
understanding the Indian
shopper is key
There is an untapped need for
shopper research agencies
Retail Technology – The Opportunity
Large players
in the organized
retail are using technology
from companies like
JDA, IBM, Wincor Nixdorf
& Bizerba
Various in-store technologies like
POS, Narrow casting, Digital
Signage's have a
huge market
Retail Supply Chain
The market size for
logistics spend in India is
$50 billion per annum,
which is about 13% of the country's GDP
Logistics cost for
manufactured goods
in the country accounts
for almost 30%of the total cost
Hugeopportunity for
supply chain solution providers,
as the international standard for logistics costs
ranges between 5%& 10%
Companies like
Bax GLobal, Manugistics, DHL, have alreadyset up shop in India
Issues Facing The Indian Retail Industry
Retail has no Industry status
Fragmented supply chain
Regional & Seasonal Differences
Non availability of quality retail space
Non availability of skilled people
Lack of Infrastructure
Entry Challenges
Need longterm
perspective &
financialStaying power
Cultural adaptability in working
Style:Cannot
transplantwestern
retailpractices
To developan ability to deal
with govt. red tape(Improving
Rapidly)
India is a regionally
diverse market
29 states,18 officialLanguages325 spokenlanguages…
a marketers challenge
The Positioning Challenge
The Location Challenge
The Format Challenge
The Manpower Challenge
The Viability Challenge
The challenges of Indian retail
The Positioning Challenge
Positioning on range
Position on price
Position on convenience
Position on store experience
Retail Brand
Differentiating
Supporting Competitive Qualifying
Wal-Mart Price Range Convenience Experience
Zara Range Price Experience Convenience
Starbucks Experience Range Convenience Price
Dollar General
Price Convenience Range Experience
Nordstrom Convenience Range Experience Price
McDonald's Convenience Price Experience Range
Disney Store Experience Range Convenience Price
Positioning mix of store retail brands
Retail Brand
Differentiating
Supporting competitive qualifying
Big Bazaar Price
Reliance Fresh
Price
Food world Price
More Price
Wal -Mart Price
Subiksha Price
The Positioning Challenge
The biggest challenge for these retailers is on how to differentiate.
There can only be one or two winners on
best price position
The Positioning Challenge
The Location Challenge
Lack of availability of stores locations convenient to shopper
The infrastructural problems to get to a store
The rising cost of leasing
Mad rush to open stores contributing to increased cost
The Format Challenge
Multiple formats being experimented on which are the few formats that will be future
Convenience versus supermarkets versus hypermarkets
Size versus experience versus viability
Specialty stand alone stores to formats in malls and hypermarkets
Emerging trends with Retailers
Format Diversification
Rapid Scale Up
Source: Mindscape
By 2013, Modern Retail would have reached at least top 600 Indian cities and towns
The Manpower Challenge
Big disconnect between quality of personnel and customer experience desired
Floor Personnel, Managing staff, visual merchandisers big - gap in skill sets required
Where is retail going to find skilled personnel when there is a total lack of organized training
and understanding of the consumer experience desired
The Viability Challenge
The biggest question? Is Modern Retail Viable if so over what period of time
Will there be a fall out ? Who will survive?
Is the path leading to mergers and acquisitions?
Where are we heading?
