Retail Sector Analysis

Presented by:
Somesh
Borse
Shaikh Moin

The NIS Academy, Aurangabad

 INTRODUCTION

‘Retaillier’- meaning ‘to break the bulk’

Involves direct interface with the customer
Retail industry : sales of $7.2 trillion worldwide
Every 10th billionaire in the world is a retailer

RETAIL SECTOR

ORGANISED SECTOR UNORGANISED SECTOR

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 Indian Retail Scenario
• Total Private Consumption Expenditure in India – 450 Billion USD

• Retail Sale – 215 Billion USD (55%)

• Organized Retail – 11 Billion USD (3%)

• Retailing – 35% of GDP

• Outlet Estimates – Over 12 Million

• Format – Only 4% larger than 500 sq.ft.

• Second Largest Employer after Agriculture(8%)

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 RETAIL SECTOR IN INDIA

ORGANISED UNORGANISED
RETAILING RETAILING
At present Rs 55000 crore
market Accounts for almost 97%
of the retail sector
Projected growth at 25%-30%
per annum
Dominated by traditional
Contribution to total retailing
forms of retailing
sales likely to rise to 9% by 2010
Commonly known as
mom & pop stores

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 I ndian Retail I ndustry Size
US Dollars in
Billions

300
250
200

5
25
5
4
24
23
150

4
4
22
21
4
4
20
19

100
50
6 8 11 14 18 23 29
0
2004 2006 2008E 2010E
Source: The Marketing Whitebook 2006

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 Indian Retail
Entities established prior to 1997 -
Allowed to continue with their existing foreign
equity components.

No FDI restrictions in the retail sector pre-1997

(Foodworld )
51:49 JV between RPG and Dairy Farm
International
Leading food retailer in India now
(Mc Donalds)

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 RETAIL FORMATS IN INDIA

MODERN RETAIL FORMAT

Department stores (Shopper’s Stop)

Hyper-markets (Big Bazaar)
Branded Stores (Allen Solly)
Specialty stores (Planet M)
Super-markets (Foodworld)
Discount stores (Subhiksha)
Entertainment (Inox)

TRADITIONAL RETAIL FORMAT

Corner kirana store
Weekly haats
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Street markets
 Indian Scenario
Demographics

 Population : 1105 mn
 Population Growth : 1.6%
 Median Age : 25 years
 Urban Population : 29%
 GDP Per capita (approx) : US$ 750

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Souce KSA Technopak 2005
 Potential of Retail in India
• At 271 million, one of the largest consuming base in the world, forming
27% of the total population

• A high spending community below 45 years comprises 81 percent of the

population

• Increased literacy from 44% in 1965 to 70% in 2003.

• Increase in media penetration to 38-million cable-TV households and 80-

million TV households in 2001.

• In spite of all the above factors organized retail stands at 2-3 per cent in
India compared to 85% in USA, 40% in Thailand, 55% in Malaysia and
20% in China

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 FDI ..

• 51% FDI allowed in single brand retailing

• Opening up of certain retail sectors for
foreign direct investment (FDI).
• The four sectors are electronic goods,
Office equipments & stationery, sports
goods, and building equipment.

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 Modern retail Formats
3% 2%
3% 3%
4% 3%
38%

7%

8% 9%
9% 11%
Clothing Textile & Fashion accessories Food & Grocery

Footwear Consumer Durables

Furniture Books & Catering Services

Watches Health & Beauty

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Mobile Phones
 MAJOR PLAYERS IN INDIA

PROMOTERS BRANDS

RPG Food World

PRIL Pantaloons,
Big Bazaar
Tata Grp Westside, Trent, CCD

K.Raheja Shopper’s Stop

R.Raheja Globus

ITC Wills Life Style

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 Key Drivers of Retail Sector

• Supply chain
• Increase in income
• Working women
• Customer analysis
• Work force
• Demand for global brands

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 Strengths
• Recognition as an industry.
• India tops the annual list of most attractive
countries for international retail expansion
• Growing disposable income of the urban Indian
consumer.
• Availability of manpower.
• Technology-intensive industry.
• Least saturated of all global markets studied.

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 Weakness
• Fast changing needs of consumer
• FDI norms
• LAND & PROPERTY
Gap between supply and demand
Only Indians can own property in India
High stamp duty on property
Lease alone costs 6%-10% of sales
LABOUR LAWS
Restricted working hours
Hiring part-time workers difficult
TAXES
High corporation tax
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 Opportunities
• India is amongst the least saturated of all major global markets in
terms of penetration of modern retailing formats

• Players emerging across formats and product categories

• Rapid Expansion for all players

• The Shopping Mall formats are fast evolving

• Partnering among Brands, retailers, franchisees, investors and malls

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 Threats

• Barriers to FDI which limits entry of global

players and limits exposure to best
international practices
• Poor Infrastructure which restricts retail
growth, creates supply chain bottlenecks
and increases wastage of farm produce
• 2008’s economic crisis create some bad
effect on sector.
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 Pantaloons
 India’s LARGEST Retailer
• 99 Outlets
• 25 Cities
• 3 mn Sq. ft. Retail Space
• 12,000 Employes
• 8,000 Customers a day
• Targeted sales of Rs. 9000 Crore and
30mn sq ft space by 2010.
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 Shoppers’ Stop

• 20 Large Departmental Stores

• About 1 mn sq. ft. Retail Space
• 2,400 Employes.

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 Reliance

• Rs. 30,000 cr ($ 6.67 bn) investment

• expected sales of Rs. 90,000+ cr ($ 20 bn)

by 2009-10

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 RPG

• Planning IPO,
• 450+ MusicWorld,
• 50+ Spencer's Hyper covering 4 mn sq ft
by 2010
• Lifestyle : Rs. 450+ cr ($ 90 mn)
investment in next 5 years to expand on
Max Hypermarkets & value retail stores,
Home & Lifestyle Centres.
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 Subhiksha

• 750 stores
• Rs. 650+ cr ($ 145 mn) sales by March
2007

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 Vishal Group

• Plans include an IPO

• investment close to Rs. 1250 cr ($ 278
mn) by 2010,
• targeting 220 outlets, taking its cumulative
retail space to 5 mn sq ft and sales
turnover of Rs. 5000 cr ($ 1 bn+).

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 Bharati Group

• Plans Rs. 31,500 cr (US$ 7 bn)

investment in creating retail network in the
country including 100 hypermalls

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 Foreign Players
• Metro AG and Shoprite already operating

• Tesco and Carrefour expected to operate soon

• Wal-Mart has already sined a JV with the Bharti Group

• Woolworths (Dick Smith Electronics - durable retail arm)

recently started their operations through a JV with Tatas
with plans to open 60 Croma stores by 2009.

• French retailer Geant is also expected to begin

operations in India soon.
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 Conclusion

 The new culture of superstores & malls has changed the way
business is done.

 Royal treatment for the customers.

 Retail transformation has already started bringing in larger

interest from International Brands / formats.
 2008’s Economic crisis find out new ideas in the sector.

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 Hierarchy in Retail

Higher Positions
Corporate, Zonal and Regional Positions

Mid Level Positions

Store Manager, Asst. Stores Manager, Floor
Supervisors, Team Leaders, Visual
Merchandisers, In-store Marketing

Present Opportunities
Frontline Sales, Customer Service
Associates, Backhand operations

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 Thank You…
?
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