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India : Retail & Consumer

Arvind Singhal
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The screen versions of these slides have full details of copyright and acknowledgements
India : Retail & Consumer
1
CONFIDENTIAL
This report/proposal has beenproducedin conjunctionwithTechnopakAdvisors andcontains informationwhichis protected
bycopyright andother intellectual propertylaw, andis subjectto the terms andconditions in the governingclient contract
Arvind Singhal
Chairman
Contents (1)
1. Emerging Markets
2. Overview of India
3. Brief Profile of Technopak
2
Some background on emerging markets (1)
Emerging markets have some unique characteristics:
The 4 BRIC countries are likely to add about 1300 Billion
to their GDP in next 5 years; G-6 will also add about the same
However, in the next 5 years, BRIC will probably add 1900 Billion
to their GDP while G-6 will probably struggle to add 1400 Billion
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On retail market changes, again, the BRIC will add about 500 Billion
and 750 Billion over next 5 and 10 years, while G-6 may add only
about 450 Billion and 500 Billion respectively
Other emerging markets growth will also match or exceed the growth
of the smaller developed markets over the next 10 years
India : Retail & Consumer
Arvind Singhal
2
The screen versions of these slides have full details of copyright and acknowledgements
Some background on emerging markets (2)
Consumer differences:
Developed markets generally have:
Generally satiated consumers as far as merchandize
is concerned
Generally jaded consumers as far as options are concerned
Demographic and lifestyle shifts leading to different priorities
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Demographic and lifestyle shifts leading to different priorities
for spending
Developing markets generally have:
Avalanche of new, first time consumers
Spirit of exploration, anticipation of something new
Willing to experiment
More spending per se on merchandise
Areas of convergence:
Consumers in both generally are:
Value driven
Medriven for me rather than for my socio-economicgroup
C i d i
Some background on emerging markets (3)
5
Convenience driven
Areas of divergence:
Emerging market consumers demand:
Value but also ambience and service
want to be pampered more
Customizationbut at little or no premium
Some background on emerging markets (4)
6
Customization but at little or no premium
Convenience beyond just access need assistance
in selection, in delivery (perhaps home delivery),
in credit facilities etc.
India : Retail & Consumer
Arvind Singhal
3
The screen versions of these slides have full details of copyright and acknowledgements
The optimum retail solution ?
Hybrids or home-grown solutions likely to work better than exported
solutions as far as emerging markets are concerned
International best practices in terms of retail operations can certainly
be exported; So can be parts of a global sourcing network
However, format definition (size, reach, product and service mix),
supply chain (a lot of effort needed to work with suppliers
and logistics providers) development, and customer loyalty acquisition
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g p ) p y y q
will have to be home-grown
Global retailers which are well known in developed countries
and wish to get into emerging markets
Very few consumers in the middle or low income levels
are aware of these retailers
These companies can leverage their experience in terms
of retailer operation management and may use their global
sourcing network to bring goods to a country of their choice
Contents (2)
1. Emerging markets
2. Overview of India
3. Brief profile of Technopak
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India is the second fastest growing economy in the world after China
Rapid economic growth
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Source: TechnopakAnalysis
Source :Central Statistical Organization(CS0)
Conversionrate: 1 =Rs. 80/-
Value (US$ Billion) GrowthRate
India : Retail & Consumer
Arvind Singhal
4
The screen versions of these slides have full details of copyright and acknowledgements
India pacing ahead
to emerge as a major economy in the world
India- one of the fastest growing economy with its service sector
contributing over 50% of the GDP; It is expected to catch up with UK
& France in terms of GDP in the next 15 years
Sectoral Breakup of India GDP Real GDP per Capita During Takeoffs
China,
Korea,
1965-2006
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Source : TechnopakAnalysis, Central Statistical Organization(CS0), ADB, EAC, UN ESCAP, MOSPI Statistics,
LehmanBrothers -India: Everythingto playfor
China,
1978-2006
1965 2006
I
n
d
e
x
t
=
1
0
0
No. of years from takeoff
India, 1991-2006
High private consumption in 2007 growing to
GDP
580 Billion
Private consumption
350 Billion
(61%)
Public spending
and capital formation
230 Billion (39%)
Retail Non Retail
Food
Apparel
Beverages
Footwear
Consumer durables
Appliances
Stationery
Kitchen utensils
Transport
Communication
Cultural services
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200 Billion
(58%)
150 Billion
(42%)
Urban (5,100 towns)
93 Billion
(45.5%)
Rural (627,000 villages)
112 Billion
(54.5%)
Modern retail
8 Billion - 8%
of urban retail spends
Modern retail
negligible
Kitchen utensils
Furniture
Furnishings
Sports goods
Health & beauty
Personal care
Jewellery
Timing
Recreation
Cultural services
Education
Rent
Utilities
Other services
(All figures at Current Prices)
Source: Economic Surveyof India andTechnopakAnalysis
Conversionrate: 1 =Rs. 80/-
307 Billion retail market by 2013
GDP
850 Billion
Private consumption
510 Billion
(60%)
Public spending and capital
formation
340 Billion (40%)
Retail
307 Billion
Non retail
204 Billion
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307 Billion
(60%)
204 Billion
(40%)
Urban
150 Billion
(47.5%)
Rural
157 Billion
(52.5%)
Modern retail 50 Billion
33% of urban retail spends
Modern retail 5.25 Billion
3.2% of rural retail spends
Source: TechnopakAnalysis
India : Retail & Consumer
Arvind Singhal
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The screen versions of these slides have full details of copyright and acknowledgements
Organized retail expected to reach 55 Bn by 2013
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55
Billion
Growth of organized retail in India
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Source: TechnopakAnalysis, CSO &Other Sources
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15
20
28
Radical transformation expected
Country Share
of organized retail
Years taken to reach
the level from <5%
China 20% 10
Poland 20% 8
Brazil 36% 15
14
Thailand 40% 18
US 85% 50
India
27% (estimated) 10
Indias ramp up steeper compared to other countries
Source: TechnopakAnalysis
5 17%(estimated)
Formats
Store size
(sq ft)
Retailers Assortment
Departmentstore 20,000 25,000
ShoppersStop, Pantaloons, Ebony,
Westside, Lifestyle, Debenhams
Clothing(65%), time wear,
perfumes, accessories
Specialtystore 1,000 100,000
HomeCentre, Crossword, Planet M,
Style Spa, Croma
Specific to product category
Conveniencestore 500- 2,000
Subhiksha, Spencers daily, Spinach,
BigApple
Groceryledwithprocessedfood
andpersonal care merchandise
Supermarket 2,000-8,000
FoodWorld, Foodbazaar, More,
RelianceFresh
80-90% is food
Hypermarket 30 000 150 000
RelianceHyper, Big Bazaar, Star 50%-60% general merchandise
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Hypermarket 30,000 150,000
India Bazaar, Spencers &40-50% foodproducts
Warehouse 100,000+ Metro, KB Wholesale
60% is foodandfood
relatedproducts
Discount 500- 2,000 MyDollar Store, Subhiksha
Specific to product category
Catalogue 5,000 10,000 Office 1
Specific to product category
Factory 3,000-10,000 The Loot, BrandFactory Apparel, footwear, accessories.
Foodcourt/quick
service restaurant
10,000 40,000 Mcdonalds, Pizza Hut, Dominos,
Papa J ohns
Food
Source: TechnopakAnalysis
India : Retail & Consumer
Arvind Singhal
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The screen versions of these slides have full details of copyright and acknowledgements
Key players
Hypermarkets and Cash Super Markets Department Stores
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yp
& Carry
Reliance
Big Bazaar
Hypercity
Star India
Aditya Birla Group
Metro Cash & Carry
p
Easyday
More
Reliance Fresh
Food Bazaar
Spar
Natures Basket
Spencers
Food World
Trinethra
Nilgiris
p
Shoppers Stop
Westside
Lifestyle
Pantaloon
Globus
Pyramid
Rapid transformation anticipated
in the next 5-7 years
Retailer Estimated* Investment
( Billion) by 2013
Estimated Turnover
( Billion) by 2014
R1 3.0 + 14+
R2 2.0 + 8+
R3 1.5 + 5+
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* Technopak Hypothesis: Not based on any input from these companies
R4 1.0 + 5+
R5 1.0 + 4+
R6 1.0 + 4+
R7 1.0 + 3+
R8 1.0 + 1+
R9 R50 7.0 + 16+
Total 18.0 + Billion 60+ Billion
Format wise share
of future investments in modern retail
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Majority of investment slated for hypermarkets and supermarkets
Source: TechnopakAnalysis
India : Retail & Consumer
Arvind Singhal
7
The screen versions of these slides have full details of copyright and acknowledgements
Category share of modern retail to change
Category Share 2008
Category Share Next 5 to 7 years
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Facilitated by retail real estate development
407
479
521
500
600
Year Wise- Malls & Retail Space
~ 250,000 sft.
~ 260,000 sft.
~ 275,000 sft.
20
28
104
126
143 137
0
100
200
300
400
2006 2007 2008 2010
Area (Mn. Sq. ft.) No. of Malls
Avg. Size
~ 200,000 sft.
Key growth drivers
Favourable demographics
Increasing affordability
New Indian
consumer
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Increasing awareness
Rising aspirations
Changing lifestyle
Living in a globally
integrated
environment
Moving towards
to self-indulgence
and self expression
India : Retail & Consumer
Arvind Singhal
8
The screen versions of these slides have full details of copyright and acknowledgements
Lowest median age of 24
for the 1+ billion population
Proportion
of Young Population
(<25 years)
India 53%
China 42%
e

i
n

y
e
a
r
s
37
38
39
39
44
44
40
45
50
2000 2000 2025 2025
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Number of people in the age group 20-49 to increase by 30% from 395
million in year 2000 to 510 million in year 2010; Over 69% population
below 35 years, while 45% is below 20
Indonesia 30%
USA 30%
Brazil 29%
J apan 27%
Germany 26%
Source: PopulationDivision, DESA, UnitedNations
M
e
d
i
a
n

a
g
e
36
30
37
USA China Russia UK
24
30
35
24
India
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The new age Indian consumer is (1)
Earningyounger
Networked &newmedia savvy
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Wants entertainment
Concernedabout health and beauty
The new age Indian consumer is (2)
Confident and optimist
Spending more
Aspirational and having desire
to achieve success
Comfortable with Western
as well as Indian way of living
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as well as Indian way of living
Adventurous and open to try
out new products, technologies
and careers
Confident to face the challenges
and grab the opportunities
Aware about global
as well as local issues
India : Retail & Consumer
Arvind Singhal
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The screen versions of these slides have full details of copyright and acknowledgements
The new age Indian consumer
is spending differently
Food and Grocery
Clothing
Footwear
Consumer durables
Home linen
Movies and theatre
Eating out
1991
Food and Grocery
Clothing
Footwear
Consumer durables
Expenditure on DVDs and VCDs
Home linen
Home accessories
Accessories
Gift
2007 2015
Food and Grocery
Clothing
Footwear
Consumer durables
Expenditure on DVDs and VCDs
Home linen
Home accessories
Accessories
Gift
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Gifts
Take-away/ Pre cooked / RTE meals
Movies and theatre
Eating out
Entertainment parks
Mobile phones and service
Household help
Travel packages
Club membership
Computer peripheral &internet usage
Gifts
Take-away/ Pre cooked / RTE meals
Movies and theatre
Eating out
Entertainment parks
Mobile phones and service
Household help
Travel packages
Club membership
Computer peripheral &internet usage
Beauty and Spa
Gaming
???
???
Note: The above categories account for 80%
of consumer spending
Leading to growth in lifestyle categories
5% 9% 5% 12% 5% CDIT
4% 11% 3% 13% 3% Furniture &furnishings
1% 8% 1% 9% 1% Footwear
9% 10% 9% 12% 8% Apparel
4% 8% 4% 8% 5% Personal care
54% 7% 58% 8% 62% Food, beverages &tobacco
% Share
2017
Growth rate
(2012-17)
% Share
2013
Growth rate
(2007-12)
% Share
2007
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Share of basic categories like F&G will fall from 62% in 2007 to 54% in 2017
Share of spends on lifestyle products and services such as mobile phones,
home improvement, travelling, eating out is expected to increase
Source: National Accounts Statistics (NAS) &TechnopakAnalysis
100% 11.5% 100% 12% 100.0% TOTAL
4% 13% 3% 11% 3% Others
0.5% 24% 0.2% 15% 0.2% Recreation
14% 12% 12% 13% 10% Medical care &health services
5% 10% 4% 12% 4% J ewellery &watches
C
Combined with changes in retail landscape
25% contribution from modern retail in the next 10 Years
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Investments
More than $ 30bn
expected to be invested
from leading Indian
and global retailers
Focus on both
back-end
as well as front end
Expansion
Existing retailers
looking for capturing
the large opportunity
Moving beyond metros
and large cities
Entry
International retailers
coming to India
Large Indian corporates
entering retail sector
Brands setting-up
their own retail chains
India : Retail & Consumer
Arvind Singhal
10
The screen versions of these slides have full details of copyright and acknowledgements
Short term demand generation through supply of retail space leading
to increased real estate availability and lower rentals in long term
Opportunity for market leaders and New Age brands to increase
interaction with consumers
Paradigm shift in FMCG supply chain; Price deflation in the offing,
anticipated pressure on consumer product companies
Key impact areas
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Consolidation and hyper competition More pressure
on the supplying brands
Creation of large retailers brands (private labels)
Creation of new market segments. Need for redefinition
of market segments
Challenges to traditional strengths
Instore dynamics
Opportunities in front end as well as at back end for Retailers, Consumer goods
companies and Service Providers
Equipment
Suppliers
Equipment suppliers, Niche IT solution providers,
service providers like mall management etc.
Opportunities in the retail sector
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Retail Opportunities Backend
Private
label
Suppliers
Niche scalable,
models in specialty
sectors like apparel,
home furnishings,
food and beverage
Warehousing, cold
chain, logistics
service providers
Private Label Suppliers to
Large Retailers
Lifes Outlook
Whyis myworld
so difficult!
Values / Attitude
Lifes Outlook
I want to get
thereFAST!
Values / Attitude
Lifes Outlook
The Worldis my
playground!
Values / Attitude
However India is not homogenous
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Missingout
No opportunity
Inertia to change
Aspirations
To emulate city
lifestyles seen
onTV / Cinema
Values / Attitude
StubbornOptimism.
Strivingfor
recognition
Aspirations
Metro lifestyle
Values / Attitude
BoldOptimism.
Live life king-size
Aspirations
Stayaheadof
the curve
Large part of the Indian population still lies in strugglers and climbers
India : Retail & Consumer
Arvind Singhal
11
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Infrastructure
Inadequate infrastructure (road, airports, cold chain)
And comes with its unique challenges
Challenges at infrastructure, real estate and manpower resulting in delay in scale
up plans of major players
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Retail
estate
Manpower
Regulation
Lack of quality real
estate and high
cost of real estate
Lack of trained
manpower
High regulation (taxation, FDI)
Key challenges
Organized retailing in India is expected to witness rapid transformation
on account of new investments, expansion by existing retailers
and entry of international retailers
Organized retailing is expected to have 25% share in next 10 years
however challenges exists in formof real estate
Summarizing
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however challenges exists in form of real estate,
manpower and poor backend
Contents
1. Emerging markets
2. Overview of India
3. Brief profile of Technopak
33
India : Retail & Consumer
Arvind Singhal
12
The screen versions of these slides have full details of copyright and acknowledgements
A unique Services organization offering advisory
and implementation support to leading Indian and International
companies in India and outside India operating in Consumer
Products & Fashion industries and in Retail & Healthcare sectors
Brief description
34
www.technopak.com
Service locations
P ki t
UK
Italy
USA
France
Turkey
Germany
Technopak has offices in Gurgaon, Bangalore and Thane
(Mumbai region) in India and serves various clients across
the world as represented below:
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Locations serviced
Office Locations
Gurgaon
Bangalore
Sri Lanka
Pakistan
Bangladesh
Dubai
Kenya
HongKong
Mauritius
USA
J apan
INDIA
Australia
Brazil
China
Turkey
Bahrain
Cambodia
Senegal
Thane
Egypt
The Technopak team
Technopak today is a team of 250+
highly skilled professionals and
experts in domestic and
international markets having
relevant real world industry and
consulting experience
graduated from premier
management and engineering
institutes in India and abroad - IIM,
MDI, IIT, IIFT, NIFT, TIT&S in India,
UCLA in USA, Lancaster University
and Imperial College in UK, INSEAD
and HEC in Paris etc
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and HEC in Paris, etc.
utilizing their diverse experience
and management skills to
contribute and deliver best results
to the clients!
.with experience across the entire
spectrum of services required in the
fields of textile, clothing, retail,
consumer goods and healthcare
India : Retail & Consumer
Arvind Singhal
13
The screen versions of these slides have full details of copyright and acknowledgements
A complete solutions provider
Corporatevisioning
Merger/alliancestrategy
Diversification/expansionstrategy
Implementation, integration,
rolloutandsupport
TailoredSolutions
Adaptable/FlexibleSolution
Personnel
management
Change Enablement
StrategyRedefined
Organizational
Redesign
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Conceptualization
Consumer Analysis
Functional Strategy
Niche
Solution
Conceptualize framework
Understandindustrydynamics
Psychographic analysis
Behavioral patterns
Decipheringshopping
&Consumptionbehavior
Industry/marketstudy
Marketingstrategy
Operational strategy
Financial strategy
Buildingbody
of knowledge
throughgathered
understanding
of the market/industry
Knowledge Management
Strategy and implementation
Retail
& consumer
products
Healthcare
Consumer
Insights
Fashion
(Textile and
Apparel)
Business strategy
Strategic alliances
Strategic industry studies
Market feasibility study
Mergers and acquisitions
Our services
38
Apparel) Mergers and acquisitions
Market entry strategy
Complete project management
Developments of processes
and systems
Developing the organisation
Rolling out the business strategy
Strategy
& planning
Implementation
Our services
Contact details
Arvind Singhal
Chairman
arvind.singhal@technopak.com
Harminder Sahni
Managing Director
harminder.sahni@technopak.com
4th Floor, Tower A
DLF Building 8
DLF Cyber City, Phase II
Gurgaon 122 002
(National Capital Region of Delhi)
India
T : +91.124.454 1111
F : +91.124.454 1199
11 A, 11th Floor,
Canberra Block,
39
,
UB City, 24 Vittal Mallya Road,
Bangalore 560 001
India
T : +91.80.40348600,
41233388
F : +91.80. 40348699
101-105, Sunjana Tower
Sun Magnetica, Near LIC building
Sevice Road,
Luiswadi, Thane 400 602
India
T : +91.22.25832222
F : +91.22.25838408
www.technopak.com
India : Retail & Consumer
Arvind Singhal
14
The screen versions of these slides have full details of copyright and acknowledgements
Thank you
40
Thank you
41

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