PRESENTED BY:ANNU DANGI (12MBA003)MANTARAN BIMBRA (12MBA015)NOOPUR GUPTA (12MBA021)RISHIKA SINGHAL (12MBA028)
 Introduction Classification Global Retail Outlook Evolution Of Indian Retail Growth Of Retail Industry Trends And C...
 Retailing can be defined as a set of business activitiesinvolved in selling goods and services to consumers for theirper...
6
7
85% 80%66%55%36% 33%20%5%15%20%34%45%64% 67%80%95%Comparative Penetration Of Organized RetailOrganized Unorganized8
 Department Store Supermarkets Warehouse Retailers Specialty Stores E-tailer Convenience Retailer Discount Retailer...
 The global retail industry is growing continuously, building onthe rebound in growth that started in 2010. Sales-weight...
12
 The reasons for this continuous growth were burgeoningmiddle classes, youthful populations and sizable foreign directinv...
14
 Indian retail market is the 5th largest market in the world byeconomic value. Retailing is one of the pillars of the In...
17
 The emergence of hypermarkets and supermarkets. Continuous improvement in the supply chainmanagement, distribution chan...
 Purchasing power of Indian urban consumer is growing andbranded merchandise in categories likeApparels, Cosmetics, Shoes...
 The Indian retail industry is BOOMING. A number of large corporate houses like theTata‟s, Raheja‟s, Piramals‟s, Ambani‟...
22
2010(In Rs. Cr)2012(In Rs. Cr)Growth % Est. 2015(In Rs. Cr)Est.Growth %Total Retail 21,19,634 28,50,055 16.0 47,80,318 18....
Beauty &PersonalCare3%Fitness1%Clothing &Apparel33%FashionAccessories1%Footwear4%Jewellery6%Eyewear1%Timewear2%Food &Groce...
26%30%27%7%5% 5%Predicted Mall Distribution Space in IndiaTier II CitiesDelhi/NCRMumbaiHyderabadPuneBangaloreThe retailing...
 The organized retail market is growing at 3.5% annually whilegrowth of unorganized retail sector is pegged at 6%. Sever...
Year % share of retail sector2007 8%2009 12%2011 22%Table I27
Year % share of OrganizedRetail SectorSource2005 3.5% A T Kearney2008 5% MC - Kinsey &Company2010 8% A T Kearney2013 10% A...
29
 Emergence of organized retail: Real estate development inthe country like construction of shopping malls has led toimmen...
 Changing mindset of customers: The customer mind set isgradually shifting from low price to better convenience, highvalu...
 Rural markets as a huge opportunity: Rural markets areemerging as a huge opportunity for retailers and this isreflected ...
33
 International Standards: Even though India has well over 5million retail outlets of different sizes and styles, it still...
 Lack of Retail space: Most of the retail outlets in India haveoutlets that are less than 500 square feet in area. This i...
 Human resource problems: Trained manpower shortage is achallenge facing the organized retail sector in India. TheIndian ...
 Challenges with Infrastructure and Logistics: The lack ofproper infrastructure and distribution channels in the countryr...
 Uniform Value added tax: Even though the Government is attemptingto implement a uniform value-added tax across states, t...
39
 Walmart is an American multinational retailer corporation thatruns chains of large discount department stores and wareho...
 Bharti Wal-Mart Private Limited is a joint venture betweenBharti Enterprises and Wal-Mart. The joint venture is establi...
 It is an international hypermarket chain headquartered inBoulogne Billancourt, France, in Greater Paris. It is one of t...
 Carrefour operates cash and carry stores in India under thename "Carrefour Wholesale Cash&Carry". Carrefourcurrently ope...
 IKEA is a privately held, international home productscompany that designs and sells ready-to assemble furnituresuch as b...
 Swedish furniture home accessories IKEA is planning to enterIndia with a Euros 1.5 billion (around Rs 10,500 crores)inve...
46
 Pantaloons is a part of the Future Group and is one of thebiggest retailers in India. This group operates in multiple r...
 Reliance Retail Limited (RRL), a subsidiary of RIL, wasfounded in 2006 and based in Mumbai, it is the secondlargest reta...
 SUBSIDIARIES & DIVISION UNDER RELIANCERETAILARE: Reliance Fresh - Retail Outlets of fruits, Vegetables & Groceries Rel...
 Trent headquartered in Mumbai started in 1998 is the retailarm of the Tata group. Area of business: Westside: This cha...
 An Indian department store chain promoted by the K RahejaCorp Group. Started in the year 1991, has more than 53 stores ...
 Launched its e-store with delivery across major cities in Indiain 2008. The website retails all the products available a...
COMPANY BUSINESS STRATEGYPANTALOONSRETAIL LTD.The company follows a multi-format strategy that capturesalmost the entire c...
0200040006000800010000120002011 2012Reliance RetailPantaloonsShoppers StopTrent
0501001502002503002011 2012PantaloonsShoppers StopTrent
56
 An investment made by a company or entity based in one country, into acompany or entity based in another country. Forei...
58
The government (led by Dr. Manmohan Singh) announced followingprospective reforms in Indian Retail Sector on September 14,...
 Half of this must be invested in back-end infrastructure facilitiessuch as cold chains, refrigeration, transportation, p...
 40% of the food produced in the country gets wasted. This is while a thirdof the country‟s population cannot afford two ...
 For the established and multi format retailers, FDI will mean readyavailability of equity funds without taking the risk ...
 Govt. does not have any clear stands on the FDI in Retail. Theyhave not done any survey and cost benefit analysis of thi...
 Majority of the Indian small-scale industries or manufacturers willbe forced to shut down and Indian manufacturing jobs ...
65
66
 India has been ranked as the third most attractive nation forretail investment among 30 emerging markets by the US-based...
 The sector is expected to see an investment of over $30 billionwithin next 5 years and putting modern retail in the coun...
 Reliance Retail has opened 150 stores and double the number ofstores will be opened across the country in all formats wi...
 Rising Disposable Income Increased number of people in earner category Urbanization Increased employment opportunitie...
 Policy related issues Taxation hurdles Under Developed supply chains Lack of adequate utilities Small size outlets ...
 Global retail giants take India as a key market Cheap and easy availability of skilled and unskilled labour Opportunit...
 Big Player entering the market People preferring multi brands over single brands Availability of credits at other reta...
75
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Retail sector
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Retail sector

  1. 1. PRESENTED BY:ANNU DANGI (12MBA003)MANTARAN BIMBRA (12MBA015)NOOPUR GUPTA (12MBA021)RISHIKA SINGHAL (12MBA028)
  2. 2.  Introduction Classification Global Retail Outlook Evolution Of Indian Retail Growth Of Retail Industry Trends And Challenges Observed Global And Indian Retail Giants FDI In Retail Future Of Retail SWOT Analysis2
  3. 3.  Retailing can be defined as a set of business activitiesinvolved in selling goods and services to consumers for theirpersonal, family or household use. Barter System was known as the first form of retail. It is world‟s largest private industry with annual sales over$6600 billion. In commerce, a "retailer" buys goods or products in largequantities from manufacturers or importers, either directly orthrough a wholesaler, and then sells smaller quantities to theend-user. Retailers are at the end of the supply chain.4
  4. 4. 6
  5. 5. 7
  6. 6. 85% 80%66%55%36% 33%20%5%15%20%34%45%64% 67%80%95%Comparative Penetration Of Organized RetailOrganized Unorganized8
  7. 7.  Department Store Supermarkets Warehouse Retailers Specialty Stores E-tailer Convenience Retailer Discount Retailer Dollar Stores9
  8. 8.  The global retail industry is growing continuously, building onthe rebound in growth that started in 2010. Sales-weighted, currency-adjusted retail revenue rose 5.1% toUS$ 4.271 trillion for the world‟s Top 250 retailers in fiscal2011, from previous year‟s 5.3% growth. More than 80 percent of the Top 250 (204 companies) postedan increase in retail revenue. Declining sales were also experienced and the reason statedwas restructuring activities and divestments of non-core assetsrather than deterioration of the core business. For the first time, the aggregate retail revenue of the Top 250topped $4 trillion.11
  9. 9. 12
  10. 10.  The reasons for this continuous growth were burgeoningmiddle classes, youthful populations and sizable foreign directinvestment. On the other hand, Japanese retailers suffered a compositerevenue decline in 2011. The revenue dropped for many of these retailers due to theearthquake disaster and resulting impact on the country‟seconomic environment. Japan‟s share of Top 250 companies and revenue increasedowing to the appreciation of yen relative to the U.S. dollar in2011. 13
  11. 11. 14
  12. 12.  Indian retail market is the 5th largest market in the world byeconomic value. Retailing is one of the pillars of the Indian economy andaccounts for 22% of country‟s GDP. Also, employment in Indian retail industry occupies secondplace after agriculture and it contributes to 8% of the totalemployment. The first few companies to come up with retail chains were intextile sector like Bombay Dyeing, S Kumars, Raymond‟s. Latest research has rated India as the top destination forretailers for an attractive emerging retail market. Indian retail is expected to grow 25 per cent annually. Modernretail in India could be worth US$ 175-200 billion by 2016.15
  13. 13. 17
  14. 14.  The emergence of hypermarkets and supermarkets. Continuous improvement in the supply chainmanagement, distribution channels, technology, backendoperations, etc. that would lead to more ofconsolidation, mergers and acquisitions and huge investments. Initially the retail industry in India was mostlyunorganized, however with the change of taste andpreferences of consumers, the industry is getting more popularthese days and getting organized as well. India shows US$ 330 billion retail market that is expected togrow 10% a year, with modern retailing just beginning.18
  15. 15.  Purchasing power of Indian urban consumer is growing andbranded merchandise in categories likeApparels, Cosmetics, Shoes, Watches, Beverages, Food andeven Jewellery, are slowly becoming lifestyle products thatare widely accepted by the urban Indian consumer. Indian retailers need to diversify and introduce newformats, and they have to pay more attention to their brandbuilding process. The emphasis here is on retail as a brandrather than retailers selling brands.19
  16. 16.  The Indian retail industry is BOOMING. A number of large corporate houses like theTata‟s, Raheja‟s, Piramals‟s, Ambani‟s (Reliance) have alreadymade their foray into this arena. Today the organized players have attacked almost every retailcategory, you name the category and the big players arealready playing in that market. The Indian retail industry has witnessed too many players invery short time, crowding several categories without lookingat their core competencies, or having a well thought outbranding strategy.21
  17. 17. 22
  18. 18. 2010(In Rs. Cr)2012(In Rs. Cr)Growth % Est. 2015(In Rs. Cr)Est.Growth %Total Retail 21,19,634 28,50,055 16.0 47,80,318 18.8Modern Retail 1,38,961 2,23,572 26.8 4,87,423 29.7Share% ofModern Retail6.6 7.8 - 10.2 -23
  19. 19. Beauty &PersonalCare3%Fitness1%Clothing &Apparel33%FashionAccessories1%Footwear4%Jewellery6%Eyewear1%Timewear2%Food &Grocery11%Food Service7%Home &Interiors5%Leisure2%Entertainment& Gaming3%ConsumerElectronics8%Mobile &Telecom11%Pharmacy2%Share of Different Retail Verticals in Modern Retail24
  20. 20. 26%30%27%7%5% 5%Predicted Mall Distribution Space in IndiaTier II CitiesDelhi/NCRMumbaiHyderabadPuneBangaloreThe retailing configuration in India is fast developing as shopping malls areincreasingly becoming familiar in large cities. The government of states like Delhiand National Capital Region (NCR) are very upbeat about permitting the use ofland for commercial development thus increasing the availability of land for retailspace; thus making NCR render to 50% of the malls in India.25
  21. 21.  The organized retail market is growing at 3.5% annually whilegrowth of unorganized retail sector is pegged at 6%. Several Indian and multinational companies are planning toinvest US $ 25 billion in the next 5 years to bring about arapid change. The industry is valued at about US $ 350 billion according tomanagement consulting firm Techno Park Advisors Pvt. Ltd. According to the tenth report of AT Kearney, organized retailis expected to reach 20% by 2020. The reasons stated for this forecasted growth are strongeconomic growth, population expansion, increasingdisposable income and rapid emergence of organized retailinfrastructure.26
  22. 22. Year % share of retail sector2007 8%2009 12%2011 22%Table I27
  23. 23. Year % share of OrganizedRetail SectorSource2005 3.5% A T Kearney2008 5% MC - Kinsey &Company2010 8% A T Kearney2013 10% A T KearneyTable II28
  24. 24. 29
  25. 25.  Emergence of organized retail: Real estate development inthe country like construction of shopping malls has led toimmense growth in the organized retail business since morespace is being made available and building of infrastructurewhich is required by organized retail players. Spending capacity of youth of India: In today‟s times, youthconstitute a large part of the total population and they are thehighest spenders amongst all the age groups so this hugespending prove to be beneficial for the retailers the most. Raising incomes and purchasing power: The per capitaincome in India has doubled between 2000-01 and 2009-10resulting in improved purchasing power. People want to buyproducts of good quality since they can afford them now.30
  26. 26.  Changing mindset of customers: The customer mind set isgradually shifting from low price to better convenience, highvalue and a better shopping experience. People now prefer toshop everything they require at one place rather than goingplaces to places. Easy customer credit: Emergence of concepts such as quickand easy loans, EMIs, loan through credit cards, has madepurchasing possible for Indian consumers, for products suchas consumer durables. Higher brand consciousness: There is high brandconsciousness among the youth; 60% of India„s population isbelow the age of 30 leading to popularization of brands andproducts.31
  27. 27.  Rural markets as a huge opportunity: Rural markets areemerging as a huge opportunity for retailers and this isreflected in the share of the rural market across mostcategories of consumption. Some of the examples are: ITC - e-Choupal HLL - Project Shakti Mahamaza Online Shopping: IT is a tool that has been used by retailersranging from Amazon.com to eBay to radically change buyingbehavior across the globe.32
  28. 28. 33
  29. 29.  International Standards: Even though India has well over 5million retail outlets of different sizes and styles, it still has along way to go before it can truly have a retail industry at parwith International standards. Inefficient supply chain management: Indian retailing isstill dominated by the unorganized sector and there is still alack of efficient supply chain management. India mustconcentrate on improving the supply chain management,which would bring down inventory cost, which can then bepassed on to the consumer in the form of low pricing.34
  30. 30.  Lack of Retail space: Most of the retail outlets in India haveoutlets that are less than 500 square feet in area. This is verysmall by International Standards. Cultural Diversity: Indias huge size and socio economic andcultural diversity means there is no established model orconsumption pattern throughout the country. Meeting needs ofdifferent people of different cultures is the biggest challenge. Real estate issues: The enormous growth of the retail industryhas created a huge demand for real estate. With over 1,000hypermarkets and 3,000 supermarkets projected to comeup, India will need additional retail space of 700,000,000 sq ft(65,000,000 m2) as compared to today.35
  31. 31.  Human resource problems: Trained manpower shortage is achallenge facing the organized retail sector in India. TheIndian retailers have difficulty in finding trained person andalso have to pay more in order to retain them. This againbrings down the Indian retailers profit levels. Frauds in Retail: It is one of the primary challenges thecompanies would have to face. Frauds, including vendorfrauds, thefts, shoplifting and inaccuracy in supervision andadministration are the challenges that are difficult to handle.This is so even after the use of security techniques, such asCCTVs and POS systems.36
  32. 32.  Challenges with Infrastructure and Logistics: The lack ofproper infrastructure and distribution channels in the countryresults in inefficient processes. This results in huge losses.Infrastructure does not have a strong base in India.Urbanization and globalization are compelling companies todevelop infrastructure facilities. Lack of transportation,including railway systems, airport capacities and powersupply need to be dealt with. Warehouse facilities and timelydistribution are other areas of challenge. To fully utilizeIndias potential in retail sector, these major obstacles have tobe removed. Government Policies: Various govt. policies hinder thegrowth of the retail industry. The policies are:37
  33. 33.  Uniform Value added tax: Even though the Government is attemptingto implement a uniform value-added tax across states, the system iscurrently plagued with differential tax rates for various states leadingto increased costs and complexities in establishing an effectivedistribution network. Restrictive Labor Laws: Stringent labor laws govern the number ofworking hours and minimum wages to be paid leading to limitedflexibility of operations and employment of part-time employees. Clearances required: Multiple clearances are required by the samecompany for opening new outlets adding to the costs incurred and timetaken in expansion in the country. Non-availability of Government land: Non-availability ofGovernment land and zonal restrictions has made it difficult to find agood real estate in terms of location and size. Lack of clear ownership titles and high Stamp duty has resulted indisorganized nature of transactions. 38
  34. 34. 39
  35. 35.  Walmart is an American multinational retailer corporation thatruns chains of large discount department stores and warehousestores. The company is the worlds third largest publiccorporation, according to the Fortune Global 500 list in 2012. It is also the biggest private employer in the world with overtwo million employees, and is the largest retailer in the world. Its operations in the United Kingdom, South America andChina are highly successful, whereas ventures in Germanyand South Korea were unsuccessful. Wal-Mart remains a family-owned business, as the companyis controlled by the Walton family who own a 48% stake inWal-Mart.40
  36. 36.  Bharti Wal-Mart Private Limited is a joint venture betweenBharti Enterprises and Wal-Mart. The joint venture is establishing wholesale cash-and-carrystores and back-end supply chain management operations inline with Government of India guidelines. Under the agreement, Bharti and Wal-Mart hold 50:50 stakesin Bharti Wal-Mart Private Limited. The first Wholesale Cash-and-carry facility named "BestPrice Modern Wholesale" opened in Amritsar in May 2009and subsequently in Zirakpur, Jalandhar, Bhopal, etc. Bharti Wal-Mart strives to improve the quality of life foremployees, customers and communities through this jointventure. 41
  37. 37.  It is an international hypermarket chain headquartered inBoulogne Billancourt, France, in Greater Paris. It is one of the largest hypermarket chains in the world (thesecond largest retail group in the world in terms of revenue andthird largest in profit after Wal-Mart and Tesco). Carrefour mainly operates in Europe, Argentina, Brazil, China,Columbia, Dominican Republic, United Arab Emirates andSaudi Arabia, but also has shops in North Africa and other partsof Asia, with most stores being of smaller size than hypermarketor even supermarket.42
  38. 38.  Carrefour operates cash and carry stores in India under thename "Carrefour Wholesale Cash&Carry". Carrefourcurrently operates 3 cash and carry stores in India, they are inDelhi, Jaipur and Meerut. Prior to September 2012, the FDI policy in India did not allowforeign companies to open multi-brand retail stores in thecountry. However, 100% FDI in cash-and-carry was permittedin 1997. As a result most global retailers, includingCarrefour, opted for this option of cash-and-carry to establishtheir presence in India. This opening is in line with the groups strategy to be presentin major emerging markets that offer significant expansionand medium- and long-term growth opportunities.43
  39. 39.  IKEA is a privately held, international home productscompany that designs and sells ready-to assemble furnituresuch as beds, chairs, desks, appliances and home accessories. The company is the worlds largest furniture retailer.Founded in Sweden in 1943. The first IKÉA store was opened in Älmhult, Smaland in1953, while the first stores outside Sweden were opened inNorway (1963) and Denmark (1969). The stores spread to other parts of the world likeEurope, Japan, Australia, Hong Kong, Canada andSingapore, France & Spain, Belgium, the United States, theUnited Kingdom and Italy.44
  40. 40.  Swedish furniture home accessories IKEA is planning to enterIndia with a Euros 1.5 billion (around Rs 10,500 crores)investment in a single-brand retail venture. In the first phase itplans to set up 25 stores with an investment of Euros 600million (around Rs 4,200 crores). The company has already sought government permission toset up a 100% Indian venture and has also promised toincrease its sourcing from the country. In these storescompanies are permitted to stock goods from one brand only. The entry also comes with the stipulation that at least 30% ofthe products have to be sourced from Indian micro, small andmedium enterprises.45
  41. 41. 46
  42. 42.  Pantaloons is a part of the Future Group and is one of thebiggest retailers in India. This group operates in multiple retail formats like Big Bazaar,a hypermarket; Food Bazaar, a supermarket; Pantaloons, achain of fashion outlets; other fashion outlets, HomeTownstores; Planet Sports, a sportswear specialty chain; and EZone, an electronics store. Headquartered in Mumbai and has over 1,000 stores across95 cities in India. The company operates around 120 Big Bazaar stores and 170Food Bazaar stores, among other formats, in over 70 citiesacross the country. It has around 16 million square feet of retail space. 47
  43. 43.  Reliance Retail Limited (RRL), a subsidiary of RIL, wasfounded in 2006 and based in Mumbai, it is the secondlargest retailer in India. Its retail outlets offer foods, groceries, apparel and footwear,lifestyle and home improvement products, electronic goods,and farm implements and inputs. The company‟s outlets alsoprovide vegetables, fruits, and flowers. During the year 2011, RRL opened 51 new stores pan India,taking the total to 100 stores across key markets in thecountry.48
  44. 44.  SUBSIDIARIES & DIVISION UNDER RELIANCERETAILARE: Reliance Fresh - Retail Outlets of fruits, Vegetables & Groceries Reliance Digital - Consumer Electronics retail Store Reliance Jewels - Jewellery Reliance TimeOut - Lifestyle store ofbooks, music, movies, toys, etc. Reliance Trends - Apparel and Clothing.49
  45. 45.  Trent headquartered in Mumbai started in 1998 is the retailarm of the Tata group. Area of business: Westside: This chain offers clothes, footwear and accessories formen, women and children, along with furnishings, artefacts and arange of home accessories. Star Bazaar: This hypermarket chain offers a wide choice ofproducts, including staple foods, beverages, health and beautyproducts, vegetables, fruits, dairy and non-vegetarian products. Fashion Yatra: The stores bring quality fashion at low prices tovalue conscious customers in towns across India. Landmark: A leader in the books and music category, this chainhas a range of over 100,000 titles in books and music, and alsostocks movies, toys, gift items and stationery.50
  46. 46.  An Indian department store chain promoted by the K RahejaCorp Group. Started in the year 1991, has more than 53 stores across thecountry. Main area of business- Apparel and Accessories. Retails products of domestic and international brands such asLouis Philippe, Pepe, Arrow, Gini & Jony, Carbon. It also retails merchandise under its own labels, such asSTOP, Kashish, LIFE and Vettorio Fratini, EllizaDonatein, Acropolis etc.51
  47. 47.  Launched its e-store with delivery across major cities in Indiain 2008. The website retails all the products available atShoppers Stop stores, including apparel, cosmetics andaccessories. With an immense amount of expertise and credibility, ShoppersStop has become the highest benchmark for the Indian retailindustry. Shoppers Stops sister stores are Crossword Bookstores, HomeStop, Brio, DesiCafé, HyperCity, M.A.C., Arcelia, MotherCare,Nuance Group, Timezone.52
  48. 48. COMPANY BUSINESS STRATEGYPANTALOONSRETAIL LTD.The company follows a multi-format strategy that capturesalmost the entire consumption basket of Indian customer.TRENT LTD. Focuses on youth with major brands of apparel and jewellery,Focuses on social marketing that helps Trent to get in theminds of mass.SHOPPERS STOP Shoppers Stop‟s strategy has always been to target “higherincome group” consumers. Although it has been quite asmaller group in India but they target the entire share of theconsumer‟s wallet.RELIANCE RETAIL Sells the products on EDLP basis at prices15-20 percent lowerthan market prices, focused largely on local brands instead ofnational brands or private labels.53
  49. 49. 0200040006000800010000120002011 2012Reliance RetailPantaloonsShoppers StopTrent
  50. 50. 0501001502002503002011 2012PantaloonsShoppers StopTrent
  51. 51. 56
  52. 52.  An investment made by a company or entity based in one country, into acompany or entity based in another country. Foreign direct investments differ substantially from indirect investmentssuch as portfolio flows, wherein overseas institutions invest in equities listedon a nations stock exchange. Entities making direct investments typically have a significant degree ofinfluence and control over the company into which the investment is made. Foreign direct investment has many forms. It includes mergers andacquisitions, building new facilities, reinvesting profits earned fromoverseas operations and intra-company loans. Foreign Investment in India is governed by the FDI policy announced by theGovernment of India and the provision of the Foreign ExchangeManagement Act (FEMA) 1999. The Ministry of Commerce and Industry, Government of India is the nodalagency for motoring and reviewing the FDI policy on continued basis.57
  53. 53. 58
  54. 54. The government (led by Dr. Manmohan Singh) announced followingprospective reforms in Indian Retail Sector on September 14, 2012 : India will allow FDI of up to 51% in ―multi-brand sector. Single brand retailers such as Apple and IKEA, can own 100% oftheir Indian stores, up from previous cap of 51%. The retailers (both single and multi-brand) will have to source atleast 30% of their goods from small and medium sized Indiansuppliers. All retail stores can open up their operations in population havingover 1 million. Out of approximately 7935 towns and cities inIndia, 55 suffice such criteria. Multi-brand retailers must bring minimum investment of US$ 100million.59
  55. 55.  Half of this must be invested in back-end infrastructure facilitiessuch as cold chains, refrigeration, transportation, packaging etc. toreduce post-harvest losses and provide remunerative prices tofarmers. Expenditure on land cost and rentals, if any, would not becounted towards back-end infrastructure. Government of India to have the first right to procurement ofagricultural products. The opening of retail competition (policy) will be within parametersof state laws and regulations. The decision to permit setting up ofretail outlets has been left to the state governments. Retail trading in any form, by means of e-commerce, would not bepermissible for companies with FDI engaged in the activity ofmulti-brand retailing.60
  56. 56.  40% of the food produced in the country gets wasted. This is while a thirdof the country‟s population cannot afford two square meals a day.Investments in the retail supply chain and storage could certainly help infinding a solution for preserving critical food produce. Global retailershave the necessary know how and expertise to build that infrastructure. In food retailing, better supply chain and technical knowhow would ensurethat the transit of produce from farm to shop floors is smooth. Foreignretail majors will ensure effective supply-chain efficiencies. That will alsocreate an opportunity for the local players in retail to learn from them. Policy mandates a minimum investment of $100 million with at least halfthe amount to be invested in back-end infrastructure, including coldchains, refrigeration, transportation, packing, sorting and processing. Thisis expected to considerably reduce post-harvest losses. This will controlfood inflation. 61
  57. 57.  For the established and multi format retailers, FDI will mean readyavailability of equity funds without taking the risk of excess leverage. Thefunds will help in executing their expansion plans and thereby offer betterrevenue visibility. General consumers are the biggest gainers as they will receive world classservices at competitive price & better quality products. The real estate industry will benefit immensely due to increase in demand.Developers were finding it difficult to find buyer for their unutilized spacebut now they will be able to fill their vacant space in their shopping malls.Banking sector will also grow consequently with the real estate sectorgrowth as money is needed. Huge investments in the retail sector will see gainful employmentopportunities in agro-processing, sorting, marketing, logistics managementand front-end retail. At least 10 million jobs will be created in the nextthree years in the retail sector. Sourcing of a minimum of 30% from Indian micro and small industry ismandatory. This will provide the scales to encourage domestic valueaddition and manufacturing, thereby creating a multiplier effect foremployment, technology upgradation and income generation.62
  58. 58.  Govt. does not have any clear stands on the FDI in Retail. Theyhave not done any survey and cost benefit analysis of this issue. The inability of the smaller players to fetch better prices from largevendors and operate on thin margins could lead to their extinction. Move might lead to large-scale job losses. International experienceshows supermarkets invariably displace small retailers. Small retailhas virtually been wiped out in developed countries like the US andin Europe. It is also argued that the global retailers will initially reduce pricesdrastically with a view to oust local competition. Once they havesuccessfully established their operations, they would raise back theprices.63
  59. 59.  Majority of the Indian small-scale industries or manufacturers willbe forced to shut down and Indian manufacturing jobs will be lostas MNC retail brand in order to compete would prefer to source2/3rd of their products cheaper from outside the country such asChina. Predatory pricing could strangulate the domestic retailers. It hasbeen seen MNCs retailers uses there big size to kill competitors. Argument that only foreign players can create the supply chain forfarm produce is not entirely true. International retail players haveno role in building roads or generating power. They are onlyrequired to create storage facilities and cold chains. This could bedone by governments in India.64
  60. 60. 65
  61. 61. 66
  62. 62.  India has been ranked as the third most attractive nation forretail investment among 30 emerging markets by the US-based global management consulting firm. The industry is expected to grow at a rate of 12% per annumfor the next 5 years. According to Associated Chambers of Commerce andIndustry of India (ASSOCHAM), the retail sector will create50,000 jobs in next few years. Discount Implementation of FDI Volume Game Luxury Retailing Rural Retailing67
  63. 63.  The sector is expected to see an investment of over $30 billionwithin next 5 years and putting modern retail in the country to$175-200 billion, according to Techno park estimates. A good talent pool, unlimited opportunities, huge markets andavailability of quality raw material at cheaper cost is expectedto make India overtake the world best retail economies by2042. Plans of various Retail players: V Mart Retail Ltd, a medium-sized hypermarket format retailchain, is set to open 40 outlets over the next three years, startingwith 13 stores in 2011, in Tier-II and Tier-III cities.68
  64. 64.  Reliance Retail has opened 150 stores and double the number ofstores will be opened across the country in all formats within fiveyears. Future Value Retail, a Future Group venture, will take itshypermarket chain Big Bazaar to smaller cities of AndhraPradesh, with an investment of around US$ 1.54 million to US$4.41 million depending on the size and format. Titan: Leading watchmaker Titan Industries Limited plans toinvest about US$ 21.83 million for opening 50 premiums watchoutlets Helios in next five years to attain a sales target of US$87.31 million. Marks and Spencer: British high street retailer, Marks andSpencer (M&S) plans to significantly increase its retail presencein India, targeting 50 stores in the next three years.69
  65. 65.  Rising Disposable Income Increased number of people in earner category Urbanization Increased employment opportunities Benefits of larger organized retail segments are several Plastic card revolution71
  66. 66.  Policy related issues Taxation hurdles Under Developed supply chains Lack of adequate utilities Small size outlets Property price hike – retail companies has to pay rents – less profit72
  67. 67.  Global retail giants take India as a key market Cheap and easy availability of skilled and unskilled labour Opportunities in kids and teens retailing segment Rural retailing is new area of growth for some of the retailers ITC launched “Chaupal Saga” “Hariyali Bazaar” by DCM group Godrej group launched the concept of „agri-store‟ named “Adhaar” Locational Advantage E- retailing 73
  68. 68.  Big Player entering the market People preferring multi brands over single brands Availability of credits at other retail (unorganized) outlets Heavy initial investment is required Emergence of hyper and super markets trying to provide customerswith- value, variety and volume74
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