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Retail

Industry
The Indian retail Industry has emerged as one
of the most dynamic & fast paced Industries
due to the entry of several new player.

Retailing Format In India

Organized Retailing :- Organized retailing refers to


trade activities undertaken by the licensed retailers i.e.,
those who are registered for sales tax, income tax etc.
These include the corporate backed hypermarket, retail
chains and also the privately owned large retail business.

Unorganized Retailing :- Unorganized retail sector it is


defined as an outlet run locally by the owner or caretaker
of a shop that lacks technical and accounting
standardization. The supply chain and sourcing are also
done locally to meet the local needs.
Facts & Figures

(Rs. 400,000 crore retail markets are unorganized in


India.
Rs. 20,000 crore segment of the market is organized)
By- AT

Retail Sector In India.


Organized
retail Sector
8%

Unorganized
retail Sector
92%

Organized Retailing In India

Malls :Located mainly in metro cities, in proximity to urban outskirts.


Ranges from 60,000 sq. ft. to 7,00,000 sq. ft. and above. E.g.:
Pantaloons, Specialty Store.

Discount Stores: As the name suggests, discount stores or factory


outlets, offer discounts on the MRP through selling in bulk reaching
economies of scale.

Department Stores:Large stores ranging from 20000-50000 sq. ft,


catering to a variety of consumer needs. Further classified into
localized departments such as clothing, toys, home, groceries, etc.

Hyper marts/Supermarkets: Large self-service outlets, catering


to varied shopper needs are termed as Supermarkets. These are
located in or near residential high streets. These stores today
contribute to 30% of all food & grocery organized retail sales.

Convenience Stores: These are relatively small stores 400-2,000

sq. feet located near residential areas. They stock a limited range of
high-turnover convenience products and are usually open for extended
periods during the day, seven days a week.

MBO: Multi Brand outlets, also known as Category Killers, offer

several brands across a single product category. These usually do well


in busy market places and Metros.

GDP contribution.

As per Associated Chamber of Commerce and Industry


(ASSOCHAM) report states that both Organized & Unorganized retail has contributed 22% of the Indian GDP.

Indian retail Provide 8% of the employment.

India is the world 5th Largest global retail space.

Organized retail penitration


8%

92%
Organized sector

Unorganised sector

Market Size

As per Boston Consultancy Group & Retail association of India

1.

Indian retail market expected to double to $1 trillion by 2020


from $600 billion in 2015.

2.

Overall retail market is expected to grow @ 12% per annum.

3.

Retail Spending In top 7 city amt to 3.58 trillion with organized


retail penetration at 19% in 2014.

Online Retail

India becoming world fastest growing e-commerce market.

1.

Robust Investment.

2.

Increasing internet user.

Indian e-commerce sales are expected to reach US$ 55 billion by


FY2018 from US$ 14 billion in FY2015.

India's e-commerce market is expected to reach US$ 220 billion in


terms of Gross Merchandise Value (GMV) and 530 million shoppers
by 2025.

Indias direct selling industry increased by 6.5 per cent in FY201415 to Rs 7,958 crore (US$ 1.19 billion) and is expected to reach a
size of Rs 23,654 crore (US$ 3.55 billion) by FY2019-20. (IDSA)

Investment Scenario

According to the Department of Industrial Policies and Promotion


(DIPP) Indian retail industry in single-brand segment has received FDI
totality to 344.9 million during April 2000- Sep 2015.
1.

Adidas and Reebok sports brands, has become the first foreign sports
company to get government approval to open 100 per cent foreignowned stores in India.

2.

Aeropostale, an American teen fashion retailer, has chosen to enter India


over China, and expects India to be among its top three markets over the
next four years with revenue target of Rs 500 crore (US$ 75 million).

3.

Textile major Arvind Limited has announced a partnership with Sephora,


owned by LVMH Moet Hennessy Louis Vuitton, a French luxury
conglomerate, in order to enter into the beauty and cosmetics segment.

4.

Abu Dhabi-based Lulu Group plans to invest Rs 2,500 crore (US$ 375
million) in a fruit and vegetable processing unit, an integrated meat
processing unit, and a modern shopping mall in Hyderabad, Telangana.

5.

Mobile wallet company MobiKwik has partnered with Jabong.com to


provide mobile payment services to Jabongs customers.

Government Initiatives

The Ministry of Urban Development has come out with a Smart


National Common Mobility Card (NCMC) model to enable seamless
travel by metros and other transport systems across the country, as
well as retail purchases.

The Government of India has accepted the changes proposed by Rajya


Sabha select committee to the bill introducing Goods and Services Tax
(GST). Implementation of GST is expected to enable easier movement
of goods across the country, thereby improving retail operations for
pan-India retailers.

The Government has approved a proposal to scrap the distinctions


among different types of overseas investments by shifting to a single
composite limit, which means portfolio investment up to 51 per cent
will not require government approval nor will it have to comply with
sectoral conditions as long as it does not result in a transfer of
ownership and/or control of Indian entities to foreigners. As a result,
foreign investments are expected to be increase, especially in the
attractive retail sector.

100% FDI in single brand retail


1.

Sourcing of at least 30% of the value of the product must be from


India small scale industry & cottage industry.

Challenges:

Heterogeneous market:- Highly diverse demographic of the


Indian Consumer.

Poor supply chain Infrastructure:- Lack of storage &


transport logistics often leading to huge wastage.

Workforce related issues:- Challenges of finding training &


retaining talent.

Concerns with e-tailing:- possibility of incorrect deliveries &


higher instances of return due to COD (cash on delivery) facility.

BY:- Subin
Suresh

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