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A study of indian apparel retailers’ expansion from tier i to tier ii and tier iii cities – a case study analysis

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  • 1. A STUDY OF INDIAN APPAREL RETAILERS’ EXPANSION FROM TIER I TO TIER II AND TIER III CITIES – A CASE STUDY ANALYSIS Submitted by: Amrapali Sinha Khushboo Priyambada Surendra Meena Yogesh Bherwani M. F. M. – I Department of FMS
  • 2. Introduction • Retailing is the final stage in a channel of distribution. • It comprises all of the businesses and people involved in the physical movement and transfer of ownership of goods and services from producer to consumer. • New formats such as departmental stores, hypermarkets, supermarkets and specialty stores.
  • 3. Introduction
  • 4. Statement of problem • In tier I cities, there is intensified competition amongst the retailers as the market is saturated • Many retailers are looking for growth opportunities in tier II and III cities as the disposable incomes of people in tier II and III cities have increased.
  • 5. Objective • To study current scenario of India apparel retailing. • To understand the factors which are influencing the retail expansion from tier I to tier II and tier III cities. • To study the strategy among the selected Indian apparel retailers in tier II and tier III.
  • 6. Research Methodology
  • 7. Data collection In our project, we are collecting secondary data from various sources: • Websites and e-books. • Books from the Learning Resource Centre. • Graphical Data and Journals and magazines published by private agencies.
  • 8. Data collection
  • 9. Limitation 1. The project is based on the secondary data. 2. This project focuses only on the apparel retail sector in India. 3. Case study of apparel retailers are taken. Only four case study of apparel retailers are taken due to time limitation. 4. Study was done only on the apparel industry’s scenario for last decade.
  • 10. Current Indian Apparel Retail Scenario
  • 11. Current Indian Apparel Retail Scenario • Indian retailing is expanding and is expected to reach at US$637 billions by 2015. • India is rated as the fifth most striking emerging retail market. • Indian retail industry which stands 2nd in terms of employment generation after agriculture. • It is estimated that 70 million Indians in a population of about 1 billion now earn a salary of $18,000 a year.
  • 12. Current Indian Apparel Retail Scenario A comparative picture of GDP contribution by retail sector of year 2010 S. No. Country Contribution of retail sector to GDP 1 USA 12% 2 India 12% 3 China 8 – 10% 4 Brazil 6% Source: Vidushi Handa, and Navneet Grover, “Retail Sector in India: Issues & Challenges”, International Journal of Multidisciplinary Research, Vol. 2, Issue 5, May 2012, ISSN 2231-5780
  • 13. Current Indian Apparel Retail Scenario • The Indian Retail sector is estimated to have a market size of about $180 billion, but the organized sector represents only 2% share of this market. Source: Hemant Sayal, “Retailing in India” International Journal of Research in Finance Marketing, Vol. 1, Issue 8, December 2011, ISSN 2231-5985
  • 14. Current Indian Apparel Retail Scenario Major retailers in India NAME COMPANY SHOPPERS STOP Incorporated by K.Raheja Group. PANTALOONS It is a flagship enterprise of ‘The Future Group’ LIFE STYLE Incorporated as a part of Landmark group (Dubai) WESTSIDE Incorporated as a part of Tata Group, Trent Ltd GLOBUS Company is ISO 9001 certified wih ERP enable supply chain. PETER ENGLAND, LOUIS PHILIPPE , Bran.ds iarelicensed by Madura Garments the retail arm of AdityaBirla ALLEN SOLLY, Group’s garment division VAN HEUSEN JOHN PLAYERS Launched by ITC Ltd PARK AVENUE Launched Raymond Ltd
  • 15. Current Indian Apparel Retail Scenario Retail sales in India Source: Shahid Akhtar, and Iftekhar Equbal, “Organized retail in India- opportunities and challenges”, International Journal of Mulyidisciplinary Research”, Vol. 2, Issue 1, January 2012, ISSN 2231-5780.
  • 16. Current Indian Apparel Retail Scenario Classification of cities and Number towns of Name of cities Cities Tier I: Major cities 6 cities Mumbai, Kolkata, Delhi, Chennai, Bangalore, Hyderabad. Tier II : Mainstream 58 cities Ahemdabad, Surat, Kanpur, Nagpur, Lucknow, Jaipur, Kochi, Vadodra, Indore, Ludhiana, Madurai, Bhopal, Patna, Pune, Visakhapatnem, Vijayawada, Coimbatore, Rajahmundry, Faridabad, Jabalpur, Cities Jamshedpur, Allahabad, Amritsar, Raipur, Mysore, Mangalore, Bhubaneshwar, Amravati, Aurangabad, Srinagar, Ranchi, Guwahati, Gwalior, Chandigarh, Bhilai, Siliguri, Loni, Ulhasnagar, Kota, Howrah, Navi Mumbai, Ghaziabad, Nagpur, Thane, Nasik, Agra, Varanasi, Rajkot…… Tier III : Climbers 46 cities Tiruchirapalli, Jodhpur, Pondicherry, Aligarh, Moradabad, Indore, Gorakhpur, Patiala, Salem, Haridwar, Katihar, Shimla, Purnia, Bilaspur, Bareily, Jalandhar, Ajmer, Bikaner, Noida, Asansol, DurgapurDehradun, Dehradun, Firozabad, Jamnagar… Tier IV : Small Towns 5094 cities Rohtak, Rourkela, Udaipur, Anand, Hassan, Etawah, Ratlam, Sonipat, Bhatinda, Karnal, Panipat, Bihar Sharif, Darbhanga, Dewas, Alwar, Bardhman, Ujjain, Bhagalpur, Agartala, Bhilwara, Mathura, Bijapur, Chandrapur, Junagarh… Source: C. S. Dalvi, and Sayali Pataskar, “Organized retailing in smaller cities – the next move”, International Journal of Research in Commerce and Management, Vol. 2, October 2011, ISSN 0976-2183. http://en.wikipedia.org/wiki/Classification_of_Indian_cities (accessed on 5. 12.2012)
  • 17. Current Indian Apparel Retail Scenario Mega cities City Population 2007-08 Average Household Expenditure (Rs. Per annum in 2004-05) (million) Average Household Income ( Rs. Per annum in 2004-05) Mumbai 20.3 4,59,457 2,01,140 Delhi 15.5 4,08,237 2,05,028 Kolkata 13.8 2,87,199 1,74,951 Chennai 6.9 3,37,059 1,55,286 Bangalore 6.6 3,00,678 1,64,923 Hyderabad 5.7 2,73,353 1,49,251 Ahmedabad 4.8 3,17,856 1,34,497 Pune 5.1 2,10,458 1,26,958 Mega Cities 78.6 3,54,090 1,76,977 Source: C. S. Dalvi, and Sayali Pataskar, “Organized retailing in smaller cities – the next move”, International Journal of Research in Commerce and Management, Vol. 2, October 2011, ISSN 0976-2183.
  • 18. Current Indian Apparel Retail Scenario Boom towns • High expenditure per household • Emerging as the largest markets following the mega cities • Characterized by younger population • Fastest growth in disposable income.
  • 19. Current Indian Retail Scenario Boom towns City Population 2007-08 Average Household Expenditure ( Per annum in 2004-05) (million) Average Household Income (Rs. Rs. Per annum in 2004-05) Surat 4.0 4,31,206 1,90,591 Kanpur 2.7 1,59,761 1,18,567 Jaipur 3.4 3,00,374 1,67,540 Lucknow 2.6 2,80,393 1,52,948 Nagpur 2.5 3,08,625 1,82,871 Bhopal 2.8 1,65,210 1,28,836 Coimbatore 1.7 2,19,846 1,52,050 Boom Towns 19.8 2,83,071 1,59,407 Source: C. S. Dalvi, and Sayali Pataskar, “Organized retailing in smaller cities – the next move”, International Journal of Research in Commerce and Management, Vol. 2, October 2011, ISSN 0976-2183.
  • 20. Current Indian Retail Scenario Niche cities • Somewhat smaller in terms of overall population, but still high on spending per household • Household expenditure nearly the same as that found in mega cities • Have the highest spending propensity of the three city groups
  • 21. Current Indian Retail Scenario Niche cities City Population 2007-08 Average Household (Rs. Per annum in 2004-05) (million) Average Household Income Expenditure ( Rs. Per annum in 2004-05) Faridabad 2.1 2,52,558 1,64,457 Amritsar 1.9 2,67,056 1,64,540 Ludhiyana 1.5 2,73,211 1,34,187 Chandigarh 1.1 4,84,775 2,12,805 Jalandhar 1.1 2,96,651 2,29,335 Niche Cities 7.7 3,04,265 1,74,287 Source: C. S. Dalvi, and Sayali Pataskar, “Organized retailing in smaller cities – the next move”, International Journal of Research in Commerce and Management, Vol. 2, October 2011, ISSN 0976-2183.
  • 22. Current Indian Apparel Retail Scenario Predicted mall distribution space in India • The number of operational malls was over 412 with 205 million square feet in 2010 and further 715 malls by 2015, on the back of major retail developments even in tier II and tier III cities in India. Source: Vidushi Handa, and Navneet Grover, “Retail Sector in India: Issues & Challenges”, International Journal of Multidisciplinary Research, Vol. 2, Issue 5, May 2012, ISSN 2231-5780
  • 23. Current Indian Apparel Retail Scenario • Rapid income growth: consumers have a greater ability to spend. • Increasing Urbanization: larger urban population that value convenience, coupled with the higher propensity of the urban consumers to spend. • Growing young population: growth of the post-liberalization maturing population, with the attitude and willingness to spend. • Spend now vs. save earlier: consumers are willing to borrow for present consumption, which has resulted in the emergence of big retail chains in most metros; mini metros and towns.
  • 24. SWOT Analysis of Indian Apparel Retail
  • 25. Strength SWOT Analysis of Indian Apparel Retail
  • 26. Weakness SWOT Analysis of Indian Apparel Retail
  • 27. Opportunity SWOT Analysis of Indian Apparel Retail
  • 28. Threat SWOT Analysis of Indian Apparel Retail
  • 29. Reasons for spread of organized retailing into smaller cities • Changing Demographics and Consumption Patterns • Consumer Behavior Trends • Abundant Availability of Skilled Labor
  • 30. Case Study of Indian Apparel Brands
  • 31. Wills Lifestyle • Wills Lifestyle, the ITC-owned premium apparel brand • 70 exclusive specialty stores across 30 cities Expansion plan • Plan to open 20 stores in cities such as Mangalore, Mysore and Jodhpur in the next 12 months • Plans to enter 10 new cities including Jalandhar, Coimbatore, Guwahati, Amritsar, Bhopal, Aurangabad, and Indore in the last year-and-a-half
  • 32. Raymond • One of India's largest branded fabric and fashion retailers • 700 retail shops spread across India and overseas, in over 200 cities Expansion plan • Raymond has opened around 250 stores in last 3 years • Target for Raymond is to open another 500 stores over the next three years • company-owned stores & franchisee-owned stores • New towns: Jalna, Latur, Porbander, Nanded, Bardoli and Baramati
  • 33. Lifestyle • In 1999, Landmark Group introduced Lifestyle Stores • Lifestyle has 33 stores in 20 cities of the India Expansion plan Cities: Kolkata ,Lucknow, Ranchi , Gandhinagar, Raipur, Allahabad , Patna, Indore, Amritsar, Bhopal
  • 34. Pantaloons • Owned by Future group. • India’s favorite fashion chain has 57 stores across the country offering Expansion plan • Pantaloons Retail plans to double the total number of stores • Stores would be opened in Kochi, Mysore, and Vishakhapatnam soon
  • 35. Conclusion • The advent of organized retailing, market saturation, rising incomes and increasing demand for better quality products into developing market of tier II and III cities is a win-win situation for all the apparel retailers. • The success of organized retailing in tier II and III cities rests largely on further development of appropriate infrastructure. • As per our study Wills lifestyle, Raymond, Lifestyle and Pantaloons are targeting smaller. Aiming for market saturation, these companies are planning to cover all important areas with wider expansion into tier 2 and tier 3 cities.
  • 36. Thank you