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The Indian RetailScenario

Presented By:Presented By:

Ajay BhuraAjay Bhura

Amit JainAmit Jain

Anirban BhattacharyaAnirban Bhattacharya

Anjan RoyAnjan Roy

Anupam KejriwalAnupam Kejriwal

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overviewoverview The sector contributes 10% of the GDP

Largest employer after agriculture - 8%* of population

Estimated to show 25%+ annual growth rate by the end of the

decade as against the current growth rate of 8.5%. Most fragmented in the world and only 3% of the entire

retailing business is in the organized sector. (CRISIL report ) Highest outlet density in world Around 12 million outlets

Long way to go

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The share of organized retail in India is around 3% of the totalretail market

The size of modern retail is about US$ 8 Billion and has grownby 35% CAGR in last five years

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marketmarket

Pantaloon Retail IndiaLtd.,

Shoppers Stop,

Style SPA Furniture Ltd, Subhiksha,

Titan Industries,

Lifestyle,

Walmart Spencers

Westside

Archies,

Big Bazaar,

Crossword,

Ebony Retail HoldingsLtd.,

Fabmall,

Food Bazaar,

Globus Stores Pvt. Ltd.,

Health and Glow,

Music WorldEntertainment Ltd.,

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Recent Trends ..

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M.N.C. REGIMEM.N.C. REGIME

CONTRACT FARMING

COLLECTION OFAGRICALTURE PRODUCTS

TO OWN FACTORY

TO OWN DEPT. STORE

TO CUSTOMER

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ConfrontingConfronting

Retail FirmsRetail FirmsBehavior

ofConsumers

SocioeconomicEnvironment

Behaviorof the

Supply Chain

Stateof

Technology

Behaviorof

Competition

Legal andEthical System

Retail

Firm

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Swot analysisSwot analysis

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..Demographic favor

Rising disposable income

Increase in number of people in earner category.

Urbanization

Shopping convenience

Low labor cost of skilled ones.

Changing consumer habits and lifestyles.

Plastic card revolution.Greater availability of quality retail space.

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....Policy related issues

- lack of industry status for retail.

- numerous licence,permits and registrationrequirement.

-farmer and retailer unfriendly APMC act.Limited consumer insight

-lack of detailed region specific customer data.

-less data on spending pattern. inadequate human resources

-lack of trained personnel at all level.-stringent employment and industry laws.

-fragment approach to human resources.

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cont..cont..

Taxation hurdle-inconsistent octroi and entry tax structure.-vat and multiple taxation issues.-large grey market presence.

Underdeveloped supply chain

-underdeveloped logistics infrastructure.-absence of national cold chain networks.-lack of national distribution networks and hubs

Lack of adequate utilities

- lack of basic infrastructure like power, transport andcommunication creates difficulty in sustaining retailoperations across the large geographical spread ofcountry.

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OpportunitiesOpportunities Exposure to global trend

Shift of expense basket from basics to

lifestyle products

Increased spend on Apparel, personal care,

entertainment

Easy Bank credit boosts retail

Easing out on Import barriers, Government

sponsorship taking shape (FDI Policy, Tax

and Duty structure, Subsidies)

M-Commerce & e-Commerce boosts retail Potential for investment.

Locational advantage.

Increase in income

Changes in lifestyle demand for

global trends & Luxury goods

Service Sector: creating new jobs.

Working Population in 2010 will70%

From Save to Spend

High disposable income family

structures on a rise

Nuclear Families

DINKS (Double Income No Kids) &

Multi income families

Rural Retail

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....Political issues.Inflation.NostalgiaLack of differentiation among the malls that are coming.Poor inventory turns and stock availability measures.

Product offerings in different stores across the country is very different

Market not mature (has to be validated)

Skilled Labour a significant challenge

High taxes, bureaucratic clearance process and labour laws

Infrastructure

Supply Chain & Logistics

Competitive activity reduction in margins

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Challenges withChallenges with

Infrastructure andInfrastructure and

Logistics:Logistics:The lack of proper infrastructure and distribution channels inthe country results in inefficient processes. This is a majorhindrance for retailers as a non-efficient distribution channel is

very difficult to handle and can result in huge losses.Infrastructure does not have a strong base in India.Urbanization and globalization are compelling companies todevelop infrastructure

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SUPPLY CHAIN AND LOGISTIC ISSUES IN INDIAN RETAIL

INDUSTRY

The biggest operational challenge for Indian retailers is managing the supply

chain properlyExperts from the supply chain management companies and existing players in the

retail sector agree to the fact that the back-end operations in retail need a solid

boosting in terms of investmentThe need to outsource the back-end operations to experts in the industry and its

feasibility is also being exploredThe infrastructure in India in terms of road, rail, and air-links are not sufficient.

So, warehousing plays a major role as an aspect of supply chain operationsTo overcome these problems, the Indian retailer is trying to reduce

transportation costs and investing in logistics through partnership or directly.

The growth of the Indian retail industry, to a large extent depends on supplychain, so efforts must be made by Indian retailers to maintain it properly

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ROLE OF FOREIGN DIRECT INVESTMENT IN INDIAN RETAIL INDUSTRY

According to a report by CB Richard Ellis, India is one of the top 50

destinations by global retailers. The report explores globalization of retailindustry and scrutinizes retailer presence in relation to market sectors, country

of origin and other influences.Indias retail market, currently valued at $511 billion, is poised to grow to

$833 billion in the next 5 years.The organized retail sector, currently accounting for less than 5 % of the total

pie, is expected to register a compounded annual growth rate of 40% and swell

to $107 billion within the same period.The consumers spending in India has increased by an impressive 75% in the

last 4 years and will quadruple in the next 20 years.Domestic retailers and mall developers plan to move into smaller towns and

cities with alacrity in order to respond to growing consumer markets there andcapture rising demand for brandsHowever to enable this sector to realize , restriction son FDI in retail will have

to be relaxed further and retail rentals will need to undergo some degree of

rationalization

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Driven from Consumption Throughout the 1.1Billion Population

5-7 million

Super Rich

70 80 million

Afford Cars, Private Healthcare &Foreign travel

250 - 300 million

Afford goods like Refrigerators , Scooters& Colour TVs

600-700 million (Generally Rural)

Afford simple industrial productse.g. bicycles , radios , textiles

erty Line = income less than $ 1/day

urce: McKinse ,

60 % of Indias population are under 24 years

http://images.google.com/imgres?imgurl=http://upload.wikimedia.org/wikipedia/en/thumb/2/23/Indian_Couple_on_Bicycle.jpg/180px-Indian_Couple_on_Bicycle.jpg&imgrefurl=http://en.wikipedia.org/wiki/Bicycle&h=250&w=180&sz=15&hl=en&start=1&tbnid=Vj2HXGk35I5f2M:&tbnh=111&tbnw=80&prev=/images?q=lower+class+indians&ndsp=20&svnum=10&hl=en&lr=&sa=N

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AheadAhead India is amongst the least saturated of all major global markets in terms of

penetration of modern retailing formatsMany strong regional and national players emerging across formats and product

categories

Most of these players are now gearing up to expand rapidly after having gonethrough their respective learning curves

Real Estate Developers are also moving fast through the learning curve to providequalitative environment for the consumers

The Shopping Mall formats are fast evolving

Partnering among Brands, retailers, franchisees, investors and malls Improved Infrastructure

Many companies like Lee Cooper, Starbucks and Walmart have put forward their

FDI proposals to the government.

Walmart-Bharti combination, Tesco, AV Birla group and Future group are all

gearing up for huge investments and aggressive business strategies.

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