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8/6/2019 Organized Retail in India
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OrganizedOrganized Retail inRetail in IIndiandia
From :STVP-2007-002
[June 12, 2007]
Presented by :
Prashant Rastogi 10202010
Anshuk Sengupta 10202046Chiradeep Mukherjee 10202048
Debojyoti Majumdar 10202063
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Current Landscape of Retail in IndiaCurrent Landscape of Retail in India
y In India 98% of the retail sector consists
of counter-stores and street-vendors.
y retail in India is a USD 320 billion dollar
industry.
y Organized Indian retail·s target population
is larger than that of the entire US which
is growing at a staggering 35% per year.
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Worry factors for major retailersWorry factors for major retailers
y Lack of infrastructure to support supply chains andefficient retail operations in India.
y Inadequate highways, the absence of a cold storagefacilities, an underdeveloped supply chain,
y Limitless bureaucracy and the lack of regulationscreated a situation where the local corner-storesand hawkers thrived.
y What the street-vendors gain will be a major
hurdle for large-scale organized retailers.y They will have to demonstrate unprecedented
innovation, adaptation and experimentation tosucceed in the Indian retail industry.
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IndianIndian ConsumerConsumer
y Young Shoppers
y Higher Incomes
y No Money, No Problem
y Urbanization
y The Lure of Organized Retaily Unorganized Retail in India:
1) Family-run stores
2) Lack of best practices when it comes toinventory control and supply-chain management
3) Lack of standardization
4) Essentially a sector populated by anyone whohas something to sell
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Causes of Low Productivity inCauses of Low Productivity in
UnorganizedUnorganized RetailRetaily Labor intensity:
y Inventory and Supply Chain Management
y low barriers to entry and the absence of
regulation.y No competition.
Low Productivity, but Still Successf ul:
y Home-Deliveryy Credit
y Proximity as of need to buy concept.
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Indian Organized Retail SectorIndian Organized Retail Sector
Organized Retail comprises of only 2% of Indian Industry.
It is growing at a healthy rate of 35%.
The sector is dormant due to:
Lack of infrastructure
Absence of product variety
Conservative Indian consumer
Organized retail aims to tap at $320 billion Indianretail industry due to
Flood of products in the market
Well informed customers
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The origin of retailThe origin of retaily USA took four decades of experiments on various
retail formats to establish into an organized retailsector since 1950.
y China could accelerate its experiments and established
its retail sector within only two decades as it hadaccess to US.
y India similar to China had huge disparity in penetrationof urban & rural organized retail penetration.
y Thus India is expected to accelerate to develop into anorganized retail sector by bridging the gap betweenurban & rural.
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Significant development in Indian marketSignificant development in Indian market
Telecom Industry: Improvement of technologies,
removal of market regulations & influx of capital ensured
better penetration from 1% to 10% within only 8 years.
Tata motors: It seriously suffered in the postliberalization phase in early 90s where foreign competition
took advantage.
It recovered by realizing the cost inefficiencies & is now
one of the fastest growing automobile industry.
Govt Interest: Removal of entry barriers, sanction of
large plots of retail sector and permission of FDI.
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Critical Policy improvements requiredCritical Policy improvements required
y Opening of 100% FDI from 51% in single
branded outlet.
y Setting up of one-stop department store to
catering all needs.
y Provision of status to Indian retail by the
Govt as separate outlets require different
permits.
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Current Indian scenario in retailCurrent Indian scenario in retail
yCorner-stores and hawkers continue to be a part of Indianretail market which have diverse sales & low margin.
y They don't compete in the small market as organized retail.
y The consumer behavior has transformed, but is partial §or dependent.
y Higher income groups who have more exposure dependent
on organized retail sector.
y Corner-stores and hawkers survive due to just- in-timepurchase, credit purchase, credit purchase & proximity.
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Pantaloons Retail: Market leader in IndiaPantaloons Retail: Market leader in India
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Condition of Wal-mart in China & South
Korea
From the above article we have seen aboutWal ² Mart·s failure to capture market inChina and its severe failure in South Korea.
The challenges faced in China are:
y Lack of space to set up malls in big cities.
y
Inefficient distribution channel and s
upplychain management.
y Manufacturers are highly scattered.
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ContdContd««
� Causes of Failure in South Korea is thatthey concentrated on the non food items
(electronics and garments) while South
Koreans are attracted to Hypermarkets forfood and beverages.
� The organized retail industry is at just itsgrowth stage in India and the causes for itslate growth are similar to that of China.
� India prefers more unorganized retail thanorganized one.
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Subsequent Increase in the retail market of IndiaSubsequent Increase in the retail market of India
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Contribution of retail industry in the GDP
growth of India
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Consumer classificationConsumer classification
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COMPARISON OF ORGANISEDCOMPARISON OF ORGANISED
vsvsUNORGANISED RETAIL SECTOR UNORGANISED RETAIL SECTOR
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Characteristics of UnorganizedCharacteristics of Unorganized
Retail:Retail:
I. Family Run Store
II. Lack of best practices when it comes toInventory Control & Supply-Chain Mgt.
III. Lack of Standardization
IV. Essentially a sector populated by anyone
who has something to sell.
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Low Productivity, But still SuccessfulLow Productivity, But still Successful
Low productivity due tounderutilization/overutilization of resources.
Home-DeliveryCredit
Proximity
Labor CostsUtilities
Tax
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Food & Groceries, 60%
Clothing & Textile, 4%
Consumer Durables, 4%
Jewellery &Watches, 4%
Home Décor & Furnishings, 3%
Beauty Care, 2%
Others, 23%
Unorganised Retail:Sector-wise Break-up
Food & Groceries
Clothing & Textile
Consumer Durables
Jewellery & Watches
Home Décor & Furnishings
Beauty Care
Others
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ORGANISED SECTORSORGANISED SECTORS
y In comparison with developedcountries, organized retail was very low, 2%
of retail industry.
y Organized retail remained dormant sector-Due to lack of infrastructure
Absence of product variety
Conservative Indian consumer
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0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
Clothingtextiles &
FashionAccessories
Footwear Jewellery &Watches
Food &Groceries
ConsumerDurables
Books,Music& Gifts
Home Décor
41.28%
16.96%
0.00%
48.12%
42.06%
30.06%
71.00%
Sector-wise CAGR Growth: Organised Retail
Clothing textiles & Fashion Accessories
Footwear
Jewellery & Watches
Food & Groceries
Consumer Durables
Books,Music & Gifts
Home Décor
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CURRENT & FUTURE PLAYERSCURRENT & FUTURE PLAYERS
y Pantaloon Retail
y Shopper·s Stop
y Haldiram
y Raymonds
y Titan
The Aditya Birla Group
Reliance
Bharti ²a joint venture withWal Mart
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y Supermarkets
y Hypermarkets
y Malls
y Departmental Stores
y Fresh-produce marketsy Single area shop
� Office supply shop
� Sports shop
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Thank you«..