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

Key Drivers Of Growth In Indian Retail

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Key Drivers Of Growth In Indian Retail Key Drivers Of Growth In Indian Retail Presentation Transcript

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