Chennai Retail Summit (CRS) 2014

2. Why this study?
6%
40%
Size of the retail market - 2013
100% = USD 440 bn, Rs 265,000 cr
Organized Retail; including e-
tailing
“Mom & Pop” stores
“Organizing”
Retailers
<20 stores
< 20 cr Turnover;
Modern practices –
billing / inventory
• Qualitative
• 23 retailers in
• Chennai and
surrounding
markets
• Categories:
Apparel,
Grocery, Food,
Restaurant,
Fast fashion,
Cosmetics,
Jewelry

3. “State of Play” of Independent Retail
Business Growth
Profitability
Competition
People
Technology
Regulatory
Policy
Customer
experience
Space
• Growth for most
retailers is 15% + y-o-
y – last 3 to 5 years.
• Margins – Shrinking
or Stable. No-one
spoke about
expanding margins

4. Branding is the single biggest challenge
Business Growth
Profitability
• Creating a brand in
the customer’s mind –
single biggest
challenge.
• Mechanisms:
• Franchising
• Creating own
label
• Service
• Move up the
value chain
Competition
People
Technology
Regulatory
Policy
Customer
experience
Space

5. “Customer's expect a
modern apparel store
which has invested in
frontage and store
windows to sell an item
worth Rs.500 at Rs.100” –
Vimal Rajan, Director,
Amigos
“Consumer discretionary
spend on apparel, footwear
is decreasing. Inflation
needs to be stable for
consumer confidence to
return” - Murali Krishnan,
MD, Kalyani Associates
Grocery retailers: Input
cost has increased by
more than 50% for the last
two years – they were not
able to pass on the entire
price rise to the
consumer.

6. Competition: “Re” and “E”
Business Growth
Profitability
Competition
People
Technology
Regulatory
Policy
Customer
experience
Space
“I realize the power
of e-commerce,
when I see my staff
regularly giving
directions to the
Flipkart delivery
boy”, Arun Kumar,
Director, Sri Ramana
Silks; Madurai

7. Space and People worries
Business Growth
Profitability
Space
Technology
Regulatory
Policy
Customer
experience
People
Not only is space
cost increasing, the
pace is the highest in
the smaller towns –
Salem, Trichy, Erode,
Karur, Thanjavur.
Retailers in these
cities report that
rentals have risen as
much as 10 times in
the last 10 years.
Competition

8. People Matters
All but one retailer
spoke of high
attrition – in most
cases - above 90%
per year. That
means that front
end staff in any
given store
changes
completely every
year.
“Attrition is linked to ‘brand power’.
Even banks give better loans to staff
who work for brands like Levi’s”
- Vimal Rajan, Diretor, Amigos

9. Technology: Social, but not sure how to go
about e-commerce
Technology
Regulatory
Policy
Emerging Retailers
are “ Surprisingly
Social”
Billing / Inventory are
automated.
Except for grocery /
small format
supermarkets, all
retailers felt that an
ecommerce listing
would help – but were
not always sure how
to go about it.

10. Regulatory: Accumulative, minor ‘irritants’
Regulatory
Policy
Emerging retailers want clarity and speed
on licensing and operating norms.
Reactions to FDI are mixed – some
believe it will push up space and people
costs, others see it as an opportunity to
learn from global retailers.
Larger retailers among those surveyed
see GST as an enabler.
About a third of the retailers wanted
protection from the predatory pricing of e-
tailers.

11. Regulatory: Accumulative, minor ‘irritants’
Regulatory
Policy
Need clarity,
transparency on:
• Licenses for store
opening
• 365 days
permission
• Labour registers
• Coordination with
urban planning (e.g.
metro work in
Chennai)
Emerging retailers want clarity and speed
on licensing and operating norms.
Reactions to FDI are mixed – some
believe it will push up space and people
costs, others see it as an opportunity to
learn from global retailers.
Larger retailers among those surveyed
see GST as an enabler.
About a third of the retailers wanted
protection from the predatory pricing of e-
tailers.

12. In summary: “State of Play” of Independent
Retail
Business Growth
Profitability
Space
People
Competition
Regulatory
Policy
Customer
experience
Technology
Based on your
feedback we will look
to continue this
dialogue with retailers
across other markets
– Delhi, Bangalore,
Mumbai, Surat etc.