Retailing – Indian Scenario

Major Retail segments• Food and grocery• Clothing, Textile & Fashion accessories• Jewellery• Watches• Footwear• Health & Beauty care services• Consumer durables• Mobile handsets & accessories• Furniture & Furnishings• Catering services• Books, Music & Gifts• Entertainment• Financial services and Banking

Growth across Retail segments

Source : Crisil research

Two-faced Indian Consumers…• Seeking upgradation in some categories & value in the others!• Key issue for any retailer is to identify the “upgrades” and

“value-focused” product categories to rationalize the product mix and maintain healthy margins

Consumer SpendsConsumer SpendsGroceryApparel

Eating Out

Upgrading

Mobile phonesHousing

AutomobilesDurablesEducation

Seeking cheaper options

Key Players – Indian Retail• Shopper’s Stop, • FoodWorld, • Vivek’s, • Nilgiris, • Future Group• Subhiksha, • Ebony,• Crosswords,• Lifestyle,• Globus, • Barista, • Qwiky’s, • Café Coffee Day, • Wills Lifestyle, • Titan, • Raymond, • Bata • Westside. • Reliance retail (Fresh & Mart)• Aditya birla group• Heritage fresh @ location

International Players in Indian Retail

• McDonald’s • Pizza Hut• Dominos • Gautier• Levis• Lee• Nike• Adidas, • Bennetton• Swarovski’s• Sony • Sharp • Kodak• The Medicine Shoppe

Introduction to RetailingS.PRASANNA VENKATESH

Current Policy on FDI

Introduction to RetailingS.PRASANNA VENKATESH

Present FDI regime and entry routes:

Allows India to have a presence of international brands, through different routes as follows:

Franchise

Joint venture

Manufacturing

Distribution

Cash and carry*

51% FDI is allowed in ‘Single Brand Retail Outlets’

*100% FDI is allowed in Wholesale Trading

Foreign Ownership RestrictionsForeign ownership in retail exist (in the longer term, restrictions are expected to

be removed)

SINGLE-BRAND RETAILER

MULTI-BRAND RETAILER

DEFINITION

Store selling products under a single brand name, e.g., a vertically integrated specialty apparel retailer

Store selling products under multiple brand names, e.g.,

• Supermarket• Hypermarket • Drug store • Department

store • Multi-brand

consumer electronics retailer

EXAMPLE

The Gap IkeaGucci TiffanyThe Body Shop

Carrefour CostcoWalgreen'sMacy'sHome DepotBest Buy

RESTRICTION

Foreign companies

allowed to own at most 51%

Foreign companies not allowed to own any equity

POTENTIAL SOLUTIONS

Licensing / franchising

Joint venture with: Strategic partner Private equity

Traditional licensing / franchising

“Hybrid” licensing / franchising: Overseas company owns and operates a business that performs key functions such as warehousing, distribution, store fit-out, sourcing and product development; Indian partner operates stores

Wholesale-only business (selling to small businesses, not consumers), e.g., club store / cash and carry format

Source: Technopak Advisors; KSA analysis

Introduction to RetailingS.PRASANNA VENKATESH

Challenges of Indian Retailing• Shortage of talents – Middle management• Efficiency of Supply chain management• Fraud and Theft in Indian retailing• Infrastructural bottlenecks• Low adoption and use of Technology• Regulatory implications• Rise in Fuel prices• Supplier maturity and relations• Disparities in culture and taste• Real estate costs

  List of a few licenses required for opening a 50000 sq.ft.retail store!1 Shops & Establishments - Registration certificate , Trade License

2 Labour

3 Weights and Measures

4 Liquor

5 Chemist

6 Pollution Control

7 Generator / Electricity Board Clearence

8 Traffic Police Clearance

9 Contractor for Labour

10 Hoarding/ Outdoor media / Signages

11 Airport Authority - if tall building

12 Entertainment - from Police authorities if medium sized entertainment

13 Health - Health Deptt

14 Fire

15 Food license if ready-to-eat food items are sold and consumed Eg. bakery

16 Water & Drainage

17 Sales Tax - Central & State

18 Excise Registration

19 Import License (Import/Export Code Number)

20 Patents & Trade Marks

21 PF Registration

22 ESI Registration

23 Transportation Permits (Octroi)

24 APMC licence for commodities

25 Music software license for playing music in store

Introduction to RetailingS.PRASANNA VENKATESH

Economic Significance of Retailing in India

• Fifth most attractive emerging retail market• Estimation of market size : US $ 350 billion• First rank in Retail development index by AT

Kearney• Employment opportunities – 17%• Creates more demand for consumer goods and

services.• Improving the standard of living and overall

economy

Retail as a career

• Buying and Merchandising• Marketing• Store operations• Sales• Finance• Human Resources• Technology and E-Commerce• Visual Merchandising• Supply chain management & Logistics

TOP Global Retail players

Global Trends by Category of Retailers

• Luxury• Grocery / food and drink• Clothing / Footwear / accessories• Electrical / computing / phone• Furniture / Textiles• Books / Music / DVDs• Departmental stores

Global Retail Development Index - 2009

Top attractive countries1. India2. Russia3. China4. United arab emirates5. Saudi arabia6. Vietnam7. Chile8. Brazil9. Slovenia10. Malaysia

Parameters for Ranking• Country risk• Market attractiveness• Market saturation• Time pressure

Global Retail Development Index - 2009

Top attractive countries1. India2. Russia3. China4. United arab emirates5. Saudi arabia6. Vietnam7. Chile8. Brazil9. Slovenia10. Malaysia

Parameters for Ranking• Country risk• Market attractiveness• Market saturation• Time pressure

Assignment – Last date on or before 18th April 2010, 5 pm.

Assignment Content• Segment Profile – Overview• Market size and economic

contribution• Product and service profile• Indian Major players in the

segment• Consumer mindset and

purchase habits towards this category.

• Future outlook

Assignment Execution• 3 members in each team• 13 retail segment

Thank you