RETAIL MANAGEMNT IN INDIABy- Debajyoti Panda

RETAIL SECTOR

According to Philip Kotler “retailing includes all the activities involved in selling goods or Services directly to final consumers for personal , Non business use”.

“Every sale of Goods and Services to final consumer” – Food products, apparel, movie tickets; services from hair cutting to e-ticketing.

THE LARGEST PRIVATE INDUSTRY IN WORLD ECONOMY

0.3

0.8

1

1.1

1.2

1.4

2

3.2

5.1

6.6

Pharmaceuticals; diagnostice

telecom

Automotive

Electronics

Energy

Chenmicals

Packaged goods

Construction / Engineering

Financial services

Retail

HIGH PRIVATE CONSUMPTIONGDP

US$ 935 billion

Private ConsumptionUS$ 580 Billion

(62%)

Public Spending and Capital Formation

US$ 355 Billion (38%)

Retail US$ 342 Billion

(59%)

Non RetailUS$ 238 Billion

(41%)

Urban (5,100 towns) US$ 154 Billion

(45%)

Rural (6,27,000 villages)US$ 188 Billion

(55%)

Modern retail – US$ 12 billion 8% of urban retail spends

Modern retail Negligible

FoodApparel

BeveragesFootwearConsumer durables

AppliancesStationery

Kitchen utensils

FurnitureFurnishings

Sports goodsHealth & Beauty

Personal CareJewelleryTiming

Transport Communicati

onRecreation

Cultural Services

EducationRent

UtilitiesOther

Services

ORGANIZED RETAIL , REVENUE AND VOLUME GROWTH

Total size of retail $300blnSize of organized retail $8bln% share of Organized retail 3%

CHALLENGES

Retail

Skilled workers

Competition

Real estate

Problem

Market Power

Supply Chain

Management

Problem in Raising

Fund

Inflation

TIMELINE OF RETAILING IN INDIA

India is the third-most attractive retail market for global retailers among the 30 largest emerging markets, according to US consulting group AT Kearney’s report published in June 2010

RAPID TRANSFORMATION

Current Size & Future Projections for Indian Retail Market

342 373 408 445 486 530

800

12 18 26 39 59 87200

0100200300400500600700800900

2007 2008 2009 2010 2011 2012 2017

US$

Billi

on

Total Retail Organized Retail

• Current GDP ~ $1 trillion• 4th largest in terms of GDP (PPP)

terms• Target customer base 405 mn.• Growth rate likely to be sustained

above 8%• Changing consumer behavior -

consumerism• Growth in availability of

infrastructure and mall space

New Delhi

Bangalore

Mumbai

Chennai

Kolkata

Ahamabad

HyderabadPune

Above 10 Mn inhabitants

Above 4 Mn inhabitants

Above 2 Mn inhabitants

Above 1 Mn inhabitants

Kanpur

Lucknow

Jaipur

Nagpur

Coimbatore

Bhopal

Madurai

Kochin

Varanasi

Visakhapatnam

Patna

Indore

Surat

Vadodara

Ludhiana

WIDELY SPREAD RETAIL INDIA

RECENT TRENDSExperimentation with formats: Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out. Ex. Quasi-mall, sub-urban discount stores, Cash and carry etc.

Store design : Biggest challenge for organized retailing to create a “customer-pull” environment that increases the amount of impulse shopping. Research shows that the chances of senses dictating sales are upto 10-15%. Retail chains like MusicWorld, Baristas, Piramyd and Globus are laying major emphasis & investing heavily in store design.

Emergence of discount stores: They are expected to spearhead the organized retailing revolution. Stores trying to emulate the model of Wal-Mart. Ex. Big Bazaar, Bombay Bazaar, RPGs.

Unorganized retailing is getting organized: To meet the challenges of organized retailing such as large Cineplex's, and malls, which are backed by the corporate house such as 'Ansals' and 'PVR‘ the unorganized sector is getting organized. 25 stores in Delhi under the banner of Provision mart are joining hands to combine monthly buying. Bombay Bazaar and Efoodmart formed which are aggregations of Kiranas.

Recent changes

Unorganized : Vast majority of the twelve million stores are small "father and son" outlets

Fragmented : Mostly small individually owned businesses, average size of outlet equals 50 s.q. ft. Though India has the highest number of retail outlets per capita in the world, the retail space per capita at 2 s.q. ft per person is amongst the lowest.

Rural bias: Nearly two thirds of the stores are located in rural areas. Rural retail industry has typically two forms: "Haats" and “Melas". Haats are the weekly markets : serve groups of 10-50 villages and sell day-to-day necessities. Melas are larger in size and more sophisticated in terms of the goods sold (like TVs)

Traditionally three factors have plagued the retail industry

PROS AND CONS PF ALLOWING FDI IN RETAIL

THANK YOU RETAIL