Key Drivers Of Growth In Indian Retail

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Key Drivers Of Growth In Indian Retail

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Key Drivers Of Growth In Indian Retail

  1. 1. Key Drivers of Growth in Indian Retail<br />Presented By<br />Pinaki Basu<br />200940<br />
  2. 2. Introduction An Overview of Indian Retail Industry<br />Size of Indian Retail Industry : <br /> $ 390 Billion or ₹ 18,10,000 crore <br />Compounded Annual Growth Rate : 11.74%<br />Source: F & R Research<br />
  3. 3. Source: Source: F & R Research<br />
  4. 4. Source: Source: F & R Research<br />
  5. 5. Key Drivers<br />
  6. 6. Consumer or Demand-Side Drivers<br />Personal Consumption as a percentage of GDP<br />Only second to Vietnam in Asia<br />Fourth in the world<br />China (~35%), Singapore (~45%), Hong Kong (~50%), <br /> South Korea (~46%) in 2007<br />
  7. 7. Consumer or Demand-Side Drivers<br />Population as a Growth Driver<br />Source: censusindia.gov.in<br />
  8. 8. Consumer or Demand-Side Drivers<br />Population as a Growth Driver<br />Adoption of Nuclear Family Culture<br />Average Household Size in 1991 : 5.57<br />Average Household Size in 2001 : 5.36<br />Average Household Size in 2011 : 5.02 (Expected)<br />Source: censusindia.gov.in<br />
  9. 9. Consumer or Demand-Side Drivers<br />Population as a Growth Driver<br />Baby Boomer Effect<br />Steep Growth in Earning Population (15-60 yrs)<br />335 million people (54 % of total population) in 1975<br />593 million people (58.3% of total population) in 2000<br />Growth in Earning Population over 25 yrs: 77% <br />( CAGR of 2.3%)<br />Growth in Indian Population over 25 yrs: 64%<br />(CAGR of 2%)<br />782 million people (62.8% of total population) in 2015 (Expected)<br />Source: censusindia.gov.in<br />
  10. 10. Consumer or Demand-Side Drivers<br />Population as a Growth Driver<br />Growing Working Women Population <br />Working women can spend 1.3 times more than housewives<br />Working women in 1991: 22%<br />Working women in 2001: 26%<br />Source: censusindia.gov.in<br />
  11. 11. Consumer or Demand-Side Drivers<br />Population as a Growth Driver<br />Growth in Urban Population<br />Urbanization has increased at a rate of 2.7 percent from 1991-2001<br />Urban population 2000 : 28.1 crore<br />Expected to grow at 2.4%<br />Source: censusindia.gov.in<br />
  12. 12.
  13. 13. Consumer or Demand-Side Drivers<br />Plastic Money Becoming a Greater Pie of Credit<br />India is the second fastest growing Financial Cards market in the Asia - Pacific region.<br />Growth at 30-35% p.a. from 27mn cards in 2007. <br />Credit Card Sales: 1.2% in 2008<br />Credit Card Sales: 1.4% in 2010<br /> (Expected)<br />Source: Euro Monitor (www.euromonitor.com)<br />
  14. 14. Consumer or Demand-Side Drivers<br />Internet Driving Awareness and Online Purchases <br />Source: Internet World Stats, Angel Research<br />
  15. 15. Retailer or Supply-Side Drivers<br />Increased Investments in Retail<br />Organised Retail will possibly touch ₹ 2300 bn in 2010<br />Funds through Private Equity, IPO route and infusion of funds through warrants<br /> Allow organised players in Retail to expand <br />Source: Ernst & Young (www.ey.com)<br />
  16. 16. Retailer or Supply-Side Drivers<br />Increased Investments in Retail<br />At an average investment of ₹ 3,000 per sq. ft. by Retailers, these investments would translate to 750 mn sq. ft. of Organised Retail space by FY2010<br />All key Retailers in India have chalked out substantial investments over next 3-4 years to fuel their expansion plans. <br />Source: Ernst & Young (www.ey.com)<br />
  17. 17. Retailer or Supply-Side Drivers<br />Increased Investments in Retail<br />Pantaloon is expected to invest around ₹ 6,000 cr over the next four years to fuel its three-fold expansion plan and take its total Retail space to 26mn sq. ft. by FY2012. <br /> Vishal Retail is expected to invest ₹ 3,000cr to fuel its ambitious five-fold expansion plan to take its total Retail space to 10mn sq. ft. by FY2011.<br />Source: Ernst & Young (www.ey.com)<br />
  18. 18. Retailer or Supply-Side Drivers<br />Tier- II & III cities to fuel future growth of Modern Retail<br />The Top-784 cities in India constitute about 26% of population<br />They contribute 35% to Total Retail Sales.<br />Tier- II and III cities account for 18% of the overall population<br />They contribute 22% to the Total Retail sales.<br />
  19. 19. Retailer or Supply-Side Drivers<br /> Shortened Supply Chain benefits consumers <br />A Traditional supply chain in India comprises 5-6 levels <br /> Two major disadvantages:<br /> Cost of the product increases<br />Increase in shrinkage<br />
  20. 20. Traditional v/s Modern supply chain <br />Company / Manufacturer<br />Distributor<br />5% Margins for Distributors<br />5% Commission for Buying Agents<br />Buying Agent<br />Back End<br />Franchisees<br />Multi-Brand Outlets<br />30% Margins for Franchisees<br />Company owned outlets / large organized retailers<br />30-32% Margins for company owned outlets/ large retailers<br />35% Margins for Multi-Brand Outlet Retailers<br />Consumers<br />Front End<br />
  21. 21. Traditional v/s Modern supply chain <br />Company / Manufacturer<br />Back End<br />38-40% Margins for Retailers<br />Consumers<br />Retailers<br />Front End<br />
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  24. 24. Thank You<br />

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