Retail Sector In India

1. RETAIL SECTORS
Presented by :-
Purval, Rashmi, Sandeep, Joy
Jayesh

2. Retail Sector

3. Evolution of Retail
Barter System was known as the first form of retail.
As time passed currency was exchanged with goods and services.
Hawkers carried out the first Retailing in Push Carts
Followed by Kirana Stores …….. Mom and Popup Stores
Finally Manufacturing era necessitated the small stores and
Specialty stores
It was a seller market still than this point of time with the limited
no of brands available
Barter chain  Single brand franchise chain Standalone large
store
<_
Chain of large stores And Finally Malls

4. • Economist says that Boom Has Started of
Retail due to more spending Capacity of
Indians

• Emerging of retail started in brief in
patterns like changing face of the Indian retail
sector
• Provide customers with 3 V’s i.e. Value,
Variety and Volume.

5. What is Retail?
“A retail is one who stocks the producers goods and is involved in
the act of it to the individual consumer, at the Margin of Profit “.
As such retailing is the last link that connects the individual
consumer with the manufacturing and distribution chain.
Selling Directly to consumer selling in smaller units / quantities
the bulk.
Very high numbers near to neighborhood
Reorganized by the service levels
Retail Sector today is worth of 394 Billion Us $

6. Indian Consumption
Big PictureGDP
2005 -06 :-PictureGDP -$700 bn :-
PFC -$220 bn (30%) Investment -$480 bn (70%)
2012 -13 :- PictureGDP -$1200 bn :-
PFC -$600 bn (50%) Investment -$600 bn (50%)

7. Heterogeneous country
29 states,12 different languages, 72 festivals
Internet era, not industrial
Young country -60% below 30 years of age
Multi-format, multi-level
Within the city, not suburbanIndian Retail-Ground
Realities

8. Consumption = Development
CREATIVE/
INNOVATIVE
avenues for
CONSUMERS to
want to spend their
money
BETTER
INVESTMENT/
BUSINESS
opportunities for
our PARTNERS &
INVESTORS

9. Food       
Books & Magazines
Fashion & Clothing  
Personal Care
Optical Consumer Electronics  
Sport & Leisure
Home Ware
Footwear & Leather 
Toys & Games
Jewellery & Watches
Furniture 
Petrol        
Different products involved in Retailing

10. Manufacturers
Whole seller
Distributor
Retailer
Organized Sector

11. Types of Retail Sectors
Unorganized Retailing
Hawkers (Kirana)
Weekly Markets
Organized retailing
Convenient / Departmental stores
Factory outlets and discounts Market
Supermarkets
Wholesalers market
Company and Franchises showroom

12. Disadvantages Of Retail Industry in
India
Margins are low
High property cost
Poor Infrastructure
Expertise in logistics
Couple of firms in retail sector have turn over more
than Rs 100 cr

13. Factors that attracted major industry
players to enter the retail sector
Phenomenal success of certain players in retail
sector
Eg: Shopper’s Stop
Hype created by management consultants and
media
Phenomenal growth of service sector and down
turn in manufacturing sector
A good way to leverage existing property
Eg: Primals started developing Crossroads after
closing of Roche factory they have acquired on
prime property in Mumbai

14. Cont….
Globalization
Success of organized retail sector in developed
countries
Changes in Consumer behavior and increase in their
purchasing power.
Ever green demand for basic things like food
Negative working capital ; Companies buy on
credit and sell for cash

15. Importance
Largest and fastest growing sector in India.
Modern retailing forms one point stop for all shopping.
Consumer gets a large product variety of brands to choose
from one roof.
First it was a sellers market and now its changing to buyers
market.
By 2010 Indian retail sector would be generating 10
million employment opportunities.

16. Retail Sector in India

19. Some of the Key Players in
Organised Retail

22. Analysis of Growth by ASSOCHAM
Organized retail growing at estimated 25%
It is expected that retail in India could be worth US$ 175-200 billion
by 2016.
2008-09 Total retails contribution to GDP is between 8% which would
further jump up to nearly 12% in next few years. By 2010, retails
contribution to national GDP in totality is likely to be 22%.
2008 – Retail Growth rate – 25-28%, Unorganized and organized
retail size – 300 billion US$
Opening 10 to 15 outlets by 2015, it plans to employ about 5,000
people selling groceries, consumer goods, fruits and vegetables. India's
retail industry is worth $300bn (£148bn)
Eg: Bharti has invested 60 Billion with the largest retail Walmart (last
year)

23. Retail Sector contribution to GDP sector is 8%-10%.
GROWTH OF INDIAN RETAIL SECTOR

25. Elasticity of Demand for Luxury and
Necessities
0
0.5
1
1.5
2
2.5
3
3.5
0 0.5 1 1.5 2 2.5 3 3.5
Price
Demand

26. Government Policies
The retail industry in India is growing at a significant pace. However, there are
several problems faced by the industry. The major challenges for the organized
sector include:
Taxation laws that favor small retailers.
Multi-point octroi collection.
According to analysts, for this industry to thrive, Indian retailers need to
emulate worldwide retail practices such as accuracy in financial reporting,
increased levels of corporate governance and greater accountability
among employees.
Foreign Equity does not go beyond 51 percent.
Additions to the product categories to be sold under ‘single brand’ require
fresh govt. approval.

27. International Retail: At a Glance
38%
27%
13%
8%
3% 2% 9%
USA EU Japan China
India RussiaOthers

28. Share of Organized Retail

29. Key Players
Highly evolved US market has WalMart taking only 8% market share
UK market has Tesco with only 13.4% market share
China market still does not have a clear leader
= 2,350
USA US$ Bn
= 406
UK US$ Bn
= 313
China US$ Bn

30. SWOT Analysis

31. Strength
Increasing demand driven by the country’s young working
population
Increase in per capita income which in turn increases the
household consumption
Create win-win situation for all links in value chain
( suppliers, producers, retailers and customers).
Improvement in the standard of living.
Technology intensive industry

32. Weakness
Lack of expertise in Supply Chain Management
Inadequate Infrastructure
Stringent Labor Laws
Lack of specialized professionals in Industry
Lack of industry status.
Government Restrictions on FDI
Non-Availability of Government Land.

33. Opportunities
Change in consumer behavior pattern and increase in
disposable income.
It is estimated that 15 million people would be
engaged in Retail and Retail support activities by
2010
Indian rural markets offer a sea of an opportunity for
the retail sector.
Upcoming international Players
Healthy prospect for the fashion industry.

34. Threats
Indian taxation system favors small retail business.
Competition from unorganized Sector to the organized Sector.
Middle class Psychology.
Increasing Real Estate prices

35. Factors which the new entrant into
retail sector failed to verify
For FMCG giants the proposition of their sales
through organized retail remains small
Failed to learn from the failures in organized
retailing like TVS group’s Stop & Shop.
Growth rate of small retailers.
Trading Inefficiencies which forces the manufactures
to increase the price

36. Cont….
Small retailers can compensate this by personalized
services like credit and free home delivery.
Unsupportive nature of few manufactures like not
printing the bar codes, despite this being so
important for retail logistics.

37. Franchise

International company gives name and
.
technology to local partner Gets royalty in
return

In case master franchise is appointed for
,
region or country he has right to appoint

local franchisees
 , , ,
Nike Pizza Hut Tommy Hilfiger Marks
,
and Spencer Mango
Manufacturing

Company sets up Indian arm forproduction
 .
Bata India It also has right to retail in
India

How they are
present
International retailers in India:
Strategies

38. Distribution

International company sets up local

distribution office

Supply products to Indian retailers to sell

Also set up franchised outlets forbrand
 ,
Swarovski Hugo Boss

Wholesale trading

Cash and Carry operations
100%
FDIpermitted

Metro Cash n Carry

How they are
present
International retailers in India:
Strategies

39. 
Improve competition

Develop the market

Greater level of exports due to increased

sourcing by majorplayers
 -
Sourcing by Wal Mart from China improved

multifold afterFDIpermitted in China

Similar increase in sourcing observed for

Metro in India

Provides access to global markets for

Indian producers
Benefits of FDI
Why FDI?

40. 
Investment in technology

Cold storage chains solve the perennial problem

of wastage

Greater investment in the food processing sector
technology

Better operations in production cycle and
distribution

Betterlifestyle

Greater level of wages paid by international

players usually

More product variety

Newerproduct categories

Economies of scale to help lowerconsumerprice

Increased purchasing capacity of consumers

Benefits of FDI
Why FDI?

41. 
FDIshould be allowed in stages
 : 26%
Initial stages FDI
 : 49%
Establishment Phase FDI
 : 100%
Mature Phase FDI

FDIpolicy

No incentives needed to attract FDI

Market size and potential are sufficient
inducers
 ,
No need for costly tax breaks import duty
, ,
exemptions land and power subsidies and

otherenticements
?
How FDI
How FDI ?
2
yrs
2
yrs
2
yrs

42. Wal-Mart’s Productivity Loop

43. Consequences of Wal-Mart’s
Productivity Loop
Step 1: Reduce Costs
B.Squeeze suppliers
1.Extracts producer revenues
2.Relocated manufacturing overseas
3.Increase foreign debts
C.Erodes Wages and Benefits
1.Low wages in a low-wage sector
2.Working off the clock
3.Skimps on benefits, e.g., health care

44. Consequences of Wal-Mart’s
Productivity Loop
Step 2: Reduce Retail Prices
B.Improves consumer living standards
1.Increases consumer purchasing power
C.Displaces existing retailers
1.Drives out small chains and independent producers
D.Displaces existing suppliers
1.Excludes local businesses from internal Wal-Mart supply
systems
E.Triggers retail price wars
1.Pressures industry rivals to imitate its operative behavior
2.Extends to national and global markets

45. Consequences of Wal-Mart’s
Productivity Loop
Step 3: Increase Sales
B.Increases efficiency of supply systems
1.Higher sales volume means greater economies of scale
uFacilitates additional consumer debt

46. Kishore Biyani and Big Bazaar
Starts with his family business in textile.
1987 he launched frist ready-made trousers brand-
Pantaloon.
1992 Pantaloon Fashion went public.
Started manufacturing garments under two more
brands – John Miller and Bare.
The business seems unviable due to high distribution
cost and margins.
1997 – opened his first store at Kolkata.

47. Cont…
Store did a business worth Rs 100 million.
2001 he introduced the hypermarket concept
adapted to Indian conditions in the form of Big
Bazaar(Mumbai).
For further expansion Biyani went for a loan of Rs
1.2 billion.
Was able to pull out over1,00,000 people within
1
st
week of its operation.

48. Cont
….
Gave the Indian customers the feel of local market
place – narrow lanes, crowded market place and
customers bumping into each other and into
commodities.
He understood that Indian like the hustle-bustle of
the market place, which gives them a feeling that
the goods are sold at a lower price.
Exploited the Economics of scale.
Tie up with manufactures to bring down the selling
price of products.

49. Cont
….
2002 Biyani started Food Bazaar within Big
Bazaar.
Focused on “Farm To Plate“ concept in Food Bazaar
(Farm next to the store).
Sold In House products.
Used traditional supply chain management.
His principle was “KIS” Keep It Simple; ie not
making the operations complex.

50. CONSUMPTION IDEAS INVESTMENT
IDEAS
WHO? FUTURE RETAIL Everyone that constitutes
consuming India
WHERE? FUTURE SPACES Creating property &
public retail infrastructure everywhere in India
WHAT? FUTURE BRANDS Identify, mentor, invest
and grow INDIA centric brands Plan
HOW? FUTURE CAPITAL Property, Brands,
Insurance & most importantly easy access to money
for consumers

51. LINE OF BUSINESS
HEALTH, BEAUTY & WELLNESS
FINANCIAL PRODUCTS
FASHION
HOME
FOOD
COMMUNICATIONS
GENERALMERCHANDISE
LEISURE &ENTERTAINMENTL

52. Pantaloon Retail (I) Limited
Fashion
Pantaloons 25,000(sq.ft.) Lifestyle(format)
Central 1,25,000(sq.ft.) Lifestyle
Big Bazaar 50,000(sq.ft.) Value
Fashion Station 15,000(sq.ft.) Value
FoodFood Bazaar 10,000(sq.ft.) Lifestyle & Value
GMBig Bazaar 50,000(sq.ft.) Value
Books & MusicDepot 1,000-6,000(sq.ft.) Lifestyle &
Value

53. Type Health, Beauty & Wellness
Star & Sitara(Beauty Products) 1,000-2,000(sq.ft.)
Value
Star & Sitara(Beauty Salons) 2,500(sq.ft.) Value
Health Village 25,000(sq.ft.) Lifestyle & Value
Communication :-
Gen M500-1,000 (sq.ft.) Lifestyle
M Port 1,500-2,000(sq.ft.) Lifestyle
M Bazaar 250-500(sq.ft.) Value

54. Electronic Goods & Consumer Appliances
E-Zone 12,500 (sq.ft.) Lifestyle
Electronics Bazaar 3,000-6,000 (sq.ft.) Value
Furniture, Furnishings & Accents Collection I10,000
(sq.ft.) Lifestyle
Furniture Bazaar3,000-6,000 (sq.ft.) Value
Home Improvement Home Town1,25,000 (sq.ft.)
Lifestyle & Value

55. Restaurants, Leisure & Entertainment
Blue Foods (50:50) --Fine Dining Restaurants
Galaxy Entertainment (15.73 % stake)
Bowling Company 30,000Lifestyle
F123-Arcade & Games 7,000-20,000 Lifestyle
Sports Bar 2,500 Lifestyle
Chamosa 100 Value
Footwear Retailing –Foot Mart Retail (I)
 LimitedLiberty Shoes (51:49)Shoe Factory
6,000-15,000 Value

56. Fashion & SportswearPlanet
Retail (49:51)Lifestyle
KidswearRetailing
GJ Future Fashions Limited (50:50)
Gini& Jony1,500-5,000Lifestyle
Health, Beauty & Wellness :-
ManipalHealth Systems ManipalCure & Care
(50:50)Lifestyle & Value
Talwarkar’s(50:50)

57. ONLINE RETAIL
Leveraging Future Group’s presence across 70% of
customer’s wallet.
Objective is to create the experience of
26thJanuary on the net.Futurebazaar.comto focus
on deals, gifting and trust.
Beta testing underway

58. Subsidiary
•73% HSRIL (Home)
•74% FCH (Capital)
•100% F/Media (OOH)
•100% F/Bazaar (E-Tailing)
•100% F/Logistics (SCM)
•100% PFP (Sourcing)
•100% Pantaloon Food Solutions (F&B)

59. Joint Ventures
•49% Planet Retail
•51% Liberty
•50% GiniJony
•50% Blue Foods
•50% Talwalkar
•50% Manipal
•50% CapitalLand(REIT & MM)
•50% Alpha GroupConsolidated

60. Conclusion
Huge Scope for Development
Competitive Market
Organized retail is fast growing at a rate of 30%
YOY
Greater opportunity for employment

61. Recession Strategy
Offering more & more special discounts.
The Great Indian Shopping Festival.