Professional Documents
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Group 8
Name Zoeb Eisa Lourdes Soares Aswathy Sreekumar Tanvi Shakeel Sunaina Bhatia Nikhil Chitalia Anand Bhate PNR NO 12020841054 12020841023 12020841009 12020841048 12020841055 12020841032 12020841005
INTRODUCTION
Pantaloon Retail Ltd. is a large Indian retailer and the flagship company of the Future group Headquartered in Mumbai, it has over 1000 stores across 93 cities and 60 rural areas in India and employees over 35,000 people Countrys largest retailer as per market capitalization and revenue as of 2010 17 million square feet of retail space
Vision Future Group shall deliver Everything, Everywhere, Every time for every Indian Consumer in the most profitable manner. Mission We share the vision and belief that our customers and stakeholders shall be served only by creating and executing future scenarios in the consumption space leading to economic development. We will be the trendsetters in evolving delivery formats, creating retail realty, making consumption affordable for all customer segments for classes and for masses. We shall infuse Indian brands with confidence and renewed ambition. We shall be efficient, cost- conscious and committed to quality in whatever we do. We shall ensure that our positive attitude, sincerity, humility and united determination shall be the driving force to make us successful.
MANIFESTO
Rewrite Rules. Retain Values. Our manifesto encourages us to explore unexplored areas and write new rules to create new opportunities and successes. Our focus in striving for a glorious future gives us strength and the ability to learn, unlearn and re-learn our ability to evolve. At Pantaloon Retail we do not wait for the future to unfold itself but create future scenarios in the consumer space and facilitate consumption because consumption means socio-economic development for our customers, employees, shareholders, associates and partners. Our customers will not just get what they need, but also get them where, how and when they need any product or service. We will not just post satisfactory results, we will write success stories. We will not just operate efficiently in the Indian economy, we will evolve it. We will not just spot trends, we will set trends by marrying our understanding of the Indian consumer to their needs of tomorrow.
Openness Introspection leading to purposeful thinking. to be open and receptive to new ideas, knowledge and information. Adaptability to be flexible and adaptable, to meet challenges.
Simplicity & Positivity: Simplicity and positivity in our thought, business and action.
COMPANY TIMELINE
1987 Company incorporated as Manz Wear Private Limited, launch of Pantaloons trouser, Indias first formal trouser brand
1992 An initial public offer (IPO) was made in the month of May.
Fashion - Pantaloons, Central, aLL, Brand Factory, Blue Sky, Top 10, Fashion Station, Big Bazaar, Lee Cooper (JV)
General Merchandise - Big Bazaar, Shoe Factory, Navras, Electronics Bazaar, Furniture Bazaar, KB'S FAIR PRICE, Food Rite Electronics - eZone, Electronic Bazzaar, Koryo , Sensei, STAPLES (JV)
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Revenues
REVENUES
Retail is Indias largest industry. The sector has witnessed an immense growth in the last few years.
The key factors responsible for the retail boom have been the change in consumer profile and demographics, increase in the number of international brands available in the Indian market, economic implications of the government, increasing urbanization, credit availability, improvement in the infrastructure, increasing investments in technology and real estate building a world class shopping environment for the consumers.
Kishore Biyani of Pantaloon Retail India Limited (PRIL) laid foundations for organized retailing India. Following Pantaloons successful venture many Indian business giants such as Reliance, Bharti, Birla and others entered into this sector, which are operating all across the major cities of India. Organized retailing faces both challenges as well as opportunities not only from the traditional format but also from the Indian mentality and international world in generating revenues.
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The total revenue of the company has shown impressive CAGR of 50.3%over FY06-FY09 to reach Rs 6341.7 crore in FY09 from Rs 1052.8 crore inFY05.
This is on account of aggressive expansion in space from 2.03 million sq. ft. in FY05 to 9.65 million sq. ft. in FY09, 47.7% CAGR. This growth was driven by aggressive expansion of the Big Bazaar format.
We expect the total revenue of the company to double to reach Rs 12473.6 crore in FY12E from Rs 6341.7 crore in FY09 backed by 22.6% CAGR in retail space from9.65 million sq. ft. in FY09 to 17.8 million sq. ft. in FY12E. We also expect an improvement of 1.9% CAGR in revenue on account of higher share of lifestyle segment.
We believe Big Bazaar will maintain its dominance in total revenue even post FY12E due to the high share of space in total space within the company.
Sales turnover and net profit of Pantaloons Retail & its competitors
Name Sales Turnover Net Profit
Pantaloons' Ret
Trent Shoppers Stop Kewal Kiran Prozone Capital Provogue Brandhouse REI Six Ten
5,702.19
821.79 1,930.04 301.9 7.9 565.39 783.48 614.05
293.65
47.27 64.26 52.14 -2.03 33.41 8.5 0.32
Cantabil Retail
Koutons Retail
164.54
164.65
-25.47
-193.81
Growth
Pantaloons success and continuous growth in the Indian organized Retail market can be attributed to a number of factors, some of which have been derived from the strategies of large retailers in the west, while others are completely tailor-made for the Indian market.
GROWTH STRATEGY
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Pantaloon adopts following strategies in order to consolidate its position as one of the leading operators in the value retail segment. Increasing penetration in the country by leveraging Pantaloon supply chain, distribution and logistics network. Emphasis on backward integration. Procurement from low-cost production centres outside India. Increasing customer satisfaction and Pantaloon base of loyal customers. Continue to upgrade information technology systems and processes.
Business Model
Store/shelf management: Store planning Inventory management Replenishment management Fresh item management Item publishing Order management
Sales/point of sales: Point-of-sales management E-payment Content management Online retailing Kiosks Self checkout
Customer: Customer loyalty management Voucher gift management Customer ordering management
Track and analyse: General ledger and account management Sales audit and invoice matching Workforce management Payroll processing Sales analysis and loss prevention
Planning: Sales planning Pricing management Promotion management Customer profiling Assortment management Category management
Central hub: Process improvement Six sigma implementation Radio Frequency Identification (RFID) implementation Enterprise security
Market Capitalization
As outstanding stock is bought and sold in public markets, capitalization could be used as a proxy for the public opinion of a company's net worth and is a determining factor in some forms of stock valuation. Preferred shares are included in the calculation.
CATEGORIZATION
Traditionally, companies were divided into large-cap, mid-cap, and small-cap. The terms mega-cap and microcap have also since come into common use, and nanocap is sometimes heard.
Different numbers are used by different indexes;[there is no official definition of, or full consensus agreement about, the exact cutoff values. The cutoffs may be defined as percentiles rather than in nominal dollars.
CATEGORIES
Mega-cap : Over $200 billion Large-cap : Over $10 billion Mid-cap : $2 billion$10 billion Small-cap : $250 million$2 billion Micro-cap : Below $250 million Nano-cap : Below $50 million
PRICE QUOTE
Industry Analysis
OVERVIEW
The Indian retail market is currently estimated at around $450 billion The sector is the second largest employer after agriculture, employing more than 35 million people with wholesale trade generating an additional employment to an additional 5.5 million people The sector has evolved dramatically from traditional village fairs, street hawkers to resplendent malls and plush outlets, growing from strength to strength The Indian retail market has witnessed consistent growth over the last few years, maintaining its share of around 30% of the GDP at current prices
According to the Indian Council for Research on International Economic Relations (ICRIER), India is the seventh-largest retail market in the world
Conceptualization
2005-10
Substantial investment 1990-05 commitments by large Indian Pure play retailers corporate realised the Entry in food potential of the and general market merchandise Most of them in category apparel segment Pan-India expansion to top 100 cities Repositioning by existing players
Large scale consolidation Movement to smaller cities and rural areas More than 56 players with revenues more than USD700 million Large scale entry of international brands FDI in single-brand retail up to 100 per cent from 51 per cent Plans afoot to
2010 onwards
Market Size : USD 450 billion India is the 5th largest retail market in the world
Data as of Dec
GROWTH RATE
The retail sector in India is emerging as one of the largest sectors in the economy
By 2012, total market size is likely to touch USD450 billion, thereby marking a CAGR of 5.9 per cent since 1998
ORGANISED RETAIL
Organised Retail Penetration (ORP) in India is low (5 per cent) compared to other countries such as the US (85 per cent)
Indian retail market is in its nascent stage; unorganised players control the market with 95 per cent market share during 2011-12
Organised retail in India is expected to be 9 per cent of total retail market by 2015 and 20 per cent by 2020
In 2011, Food and Grocery accounted for nearly 59.5 per cent of total revenues in the retail sector in India; Clothing and Fashion followed with a share of 9.9 per cent
In 2011, 48 per cent of total household income in India was spent on food and groceries
Demand for western outfits and readymade garments has been growing at 40-45 percent annually; apparel penetration is expected to increase to 30-35 per cent by 2015
Hypermarkets would be the largest retail segment, accounting for 21 per cent of total retail space by 201314
Major contributor to GDP High Growth Rate Indian consumers have high disposable incomes, which translates into high consumption level
Highly unorganized Shortage of talented professionals Low productivity compared to international players
Increasing awareness of consumers about products and services Innovation for new product development Retail sector in rural India is almost untouched, presenting tremendous opportunity Global retail giants see India as a key market
Threat
Rigid government policies and regulations restrict the entry of new players Price competition among retailers puts downward pressure on margins Economic slowdown is having an adverse effect on consumer spending
Focus on particular product categories and carry most of the brands available Display most of convergence as well as consumer/electroni c products, including communication and IT group It is an online shopping facility for buying and selling products and services; the facility is widely used for electronics, health
One-stop shop for customers; many product lines of different brands on display Highly convenient as it provides 24X7 access, saves time, and ensures secure transaction
e-Trailers
TOP 10 PLAYERS
Company Name
Annual Marke Company Revenue t Name (Crores INR) Share 41% 18% 11% 7% 7% 6% 5% 2% 2% 1%
Pantaloon Ret 4325 Shoppers Stop 1929 Koutons Retail 1204 Brandhouse 737 REI Six Ten 717 Trent 686 Provogue 562 Kewal Kiran 234 Cantabil Retail 186 Arunjyoti Enter 79 TOTAL 10659
Kewal Kiran 875 Provogue 284 REI Six Ten 249 Brandhouse 72 Koutons Retail 63 Arunjyoti Enter 57 Cantabil Retail 26 TOTAL 11812
Departmenta l Stores
Hypermarket s
Pantaloon Retail is the leader in this format with 160 Big Bazaar stores
Specialty Stores
Pantaloon has 65 stores Trent operates 59 stores Shoppers Stop has 51 stores Reliance Retail has launched Trends in this format
Titan Industries is a large player, with 320 World of Titan, 130 Tanishq and 177 Titan Eye+ shops Vijay Sales, Croma, E-Zone and Viveks are into consumer electronics Landmark, Crossword and Odyssey focus on books, gifts and entertainment
HyperCITY, Trent (Star Bazaar), Spencers (Spencer Hyper), Aditya Birla Retail (More.) and Reliance are other players
KEY POINTERS
Supply: Players are now moving to Tier II and Tier III cities to increase penetration and explore untapped markets as Tier I cities have been explored enough and have reached a saturation level.
Demand: Healthy economic growth, changing demographic profile, increasing disposable incomes, changing consumer tastes and preferences are some of the key factors that are driving and will continue to drive growth in the organised retail market in India.
Barriers to entry: Reforms by India in opening up its economy have greatly improved trade prospects, but major barriers still exist such as regulatory issues, supply chain complexities, inefficient infrastructure, and automatic approval not being allowed for foreign investment in retail. But, some of these are set to change with FDI in multi-brand retail set for approval. Bargaining power of suppliers: The bargaining power of suppliers varies depending upon the target segment, the format followed, and products on offer. The unorganized sector has a dominant position, still contributing 95% of the total retail market. There are few players who have a slight edge over others on account of being established players and enjoying brand distinction. Since it is a capital intensive industry, access to capital also plays an important part for expansion in the space.
Bargaining power of customers : High due to wide availability of choice. With FDI coming in, this will increase further. Competition: High Competition is characterized by many factors, including assortment, products, price, quality, service, location, reputation, credit and availability of retail space etc. New entrants (business houses and international players) are expected to further intensify the competition and so would the foreign players' entry.
Rise in Incomes and Purchasing Power Emergence of the Consumer Class Change in Consumer Mindsets Indian Demography(Young and Middle Aged)
Easy Consumer Credit Attitude to "Splurge rather than Save A perpetual hunger towards possessing quality/branded merchandise Influence of the West on Indian Consumers
100% FDI is permitted under the automatic route for trading companies for cash & carry trading and wholesale trading The Cabinet also gave the nod for raising the FDI limit in single-brand retail ventures to 100% Reduction in incidence of the excise duty on branded apparels from 4.5% to 3.6% is likely to boost the demand for branded apparels, and benefit companies like Provogue and Raymonds The Government is planning to remove the old tax systems to simplify the tax calculation and avoid double taxation in Indian retail. New Goods and Service Tax (GST) will simplify the tax structure
The government is in talks to allow foreign direct investment up to 51% in multibrand retailing,US Secretary of State Hillary Clinton on her recent visit to India, pitched for the opening up of the Indian retail market for foreign direct investment (FDI). The FDI in retail would allow US multi-brand retail chains like Wal-Mart to open stores in India
SEGMENTAL ANALYSIS
The structure of Indian retail is developing rapidly with shopping malls becoming increasingly common in the large cities however the traditional formats like hawkers, grocers etc. continue to co-exist with the modern formats of retailing
Business Monitor International (BMI) forecast that sales through Mass Grocery Retail outlets to reach to USD 27.67 billion by 2015 According to industry estimates, lack of supply chain infrastructure results in 40% loss of farm produce; investment in back-end infrastructure should help reduce this Sourcing of processed food from SMEs could result in higher margins Political support for FDI in food and grocery may face challenges and many states may not allow FDI or else allow with more restriction Hypermarkets and supermarkets are the best suited retail structure for this segment
Readymade and western outfits sales are growing at 4045% annually Opening of multi-brand apparel retail for FDI is not expected to face major political deliberations For apparel retail, investment in back-end infrastructure lies in creation of warehouses Manufacturing facilities (for private label brands) and logistics is most likely to be outsourced International retailers could have private label brands sourced from the SME segment Departmental stores is the best suited retail structure for this segment
This category faces stiff competition from small time traditional retailers as well as individual carpenters (India highly customization focused) For furniture retail, options for investment in back-end infrastructure lies in creation of manufacturing facilities/warehouses Some of the furniture products could be sourced from the SME segment FDI in furniture retail is not expected to face major political deliberations Specialty retail outlet is best suited structure for this segment
Penetration level of modern retail is just 4% and there is a huge untapped potential in this segment Private label brands in some of the product categories can be sourced from the SME segment From Dhoni announcing 200 gyms to staggering sales of Shehnaz Hussain/Biotique type local brands to foreign brands like MAC, Clinique etc.,this segment is all set to explode for the health & beauty conscious Indian youth
EMERGING RETAIL FORMATS - LUXURY RETAILING A decade ago luxury retail in India was only meant for the consumption of elites. The
spending habits of a consumer have redefined the meaning of luxury - luxurious goods have become necessities, not just for the rich but also for the middle class population. For a common buyer, the outlook for luxury has changed from an aspirer to an acquirer
The Indian luxury market stood at around USD 5.8 billion and expected to grow to make India the twelfth largest luxury retail market in the world by 2015 The Indian luxury Industry is growing at a rapid pace with a CAGR ~20% and shall grow to nearly double of its current size over the next 5 years
An increase in the young working population especially women and growing opportunities in the service sector Growing incomes coupled with optimism about the future Easier consumer credit & loans Increase in credit card spending Real estate development in the country On-going liberalization of retail sector
Over the last few years, Indias luxury industry has witnessed significant transformation and advancement. A short visit to Delhis Emporio mall or Mumbai Palladiums will be proof enough for this as you see people queuing up to go inside in the middle of an afternoon and thousands of people walking out with red, green, yellow bags with Gucci, Ferragamo, Tods, Harry Winston, Hermes all over them. India used to be a production outsourcing destination for a long time, but now due to a steadily growing economy and globalized business environment, India has rapidly transformed into a large market for Luxury goods In view of the growing importance of the country in the global luxury industry, Mint, Indias leading business daily every year conducts a conference which brings together the stakeholders to a common platform The following are the views of the Industry Experts from the recent Indian Luxury conference organized by Mint:
KEY CHALLENGES