Emerging indian retail


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Emerging indian retail

  1. 1. Indian Retail scenario
  2. 2. * India‘s increasingly affluent middle class-300 million * Increasing proportion-Higher disposable income 83000 millionaires,India to be the fastest wealth creator by 2010. * The new age Indian youth-modern,well informed * Indian value system-price sensitive * Market Growth 8-10% annual growth with 30%+ growth rate for modern format retail * Strong Economy: Fourth Largest on purchasing parity basis * Market opportunities: Growing consumers aspirations together with very low penetration of modern format retailing. * Infrastructure-Large amount of quality retail space being added
  3. 3. Evolution of Indian Retail Historic/Rural Reach-Weekly Markets,Village fairs,melas- Source of entertainment Traditional/pervasive reach-Convenience store,Mom and Pop/kiranas-Neighborhood stores/convenience. Government supported-PDS Outlets,Khadi stores,cooperatives-Availability/Low costs/Distribution Modern Formats/International-Exclusive Brand Outlets/Hyper/Super Market/Departmental Stores/Shopping Malls-Shopping Experience/Efficiency
  4. 4. <ul><li>Retailing Formats </li></ul><ul><ul><li>Hyper Marts </li></ul></ul><ul><ul><li>Large supermarkets,typically (3500-5000 Sft) </li></ul></ul><ul><ul><li>Mini Supermarkets,typically (1000-2000 Sft ) </li></ul></ul><ul><ul><li>Convenience Store,typically (750-1000 sft ) </li></ul></ul><ul><ul><li>Discount/shopping list grocer </li></ul></ul><ul><ul><li>Traditional retailers trying to reinvent by introducing self-service formats as well as value added services </li></ul></ul>
  5. 5. Indian Retailers Hypermarket Department Stores Entertainment Big Bazaar Life Style Fame Giant Pantaloons Adlabs Shoprite Pyramids Fun Republic Star Bazaar Shopper’s stop Inox Aditya B Group Trent PVR Hyper city Cinemax
  6. 6. Consumer Expenditure in Organized Retail
  7. 7. Retailers-Always healthier than Ever Company Market Cap(Rs mn) P/E CAGR Returns 3 Year or On Listing Pantaloons 3,561 60.2 89% Shopper’s Stop 1,727 63.7 29% Trent 991 40 54%
  8. 8. Global Retail Scenario Global Retail Industry is of size of USD 8 Trillion Over 50 of the Fortune 500 companies are retailers Fortune #1 “Wal-Mart” is a retailer 25 of the asian top 200 companies are retailers
  9. 9. Indian Retail Market * Over 12 Million Outlets in India *Organized Retail 3% *Set to Grow to 8-10% by 2010 *Organized Retail expected to be around Rs.110,000 Cr (USD 25 b) by 2010
  10. 10. FDI In Indian Retailing *Franchise-Nike,Pizza Hut, Tommy Hilfiger,Marks and spencer,Mango *Manufacturing-Bata India *Distribution-Swarovski,Hugo Boss * Wholesale Trading-Metro cash & carry *Food outlets-McDonald’s KFC,Pizza Hut,Dominos
  11. 11. Benefits of FDI *Greater per capita income *Increasing Tax paying Population *Reduced Tax Evasion *Greater Sourcing From India *Greater Consumer Spending due to economic boom
  12. 12. The Changing Indian Consumer The Urban Consumer *Getting exposed to international lifestyle *Inclined to acquiring asset *More discerning and demanding than ever No Longer need-based shopping *Shopping is a family experience Changing Mindset *Increasing tendency to spend *Post liberalization children coming of age *100 Mn17-21 year olds tend to spend freely Greater level of Education
  13. 13. Challenges of Retailing in India *Automatic approval is not allowed for foreign investment in India * Regulations restricting real estate purchases,and cumbersome local laws * Taxation,which favors small retail business * Absence of developed supply chain and IT management * Lack of trained workforce * Low skill level for retailing management
  14. 14. <ul><li>Recommendations </li></ul><ul><li>Grant full industry status to retail </li></ul><ul><li>Permit FDI in retail in phases </li></ul><ul><li>Invest in supply chain infrastructure </li></ul><ul><li>Ease distribution </li></ul><ul><li>Ensure single window clearance foe retail chains </li></ul><ul><li>Organize market for real estate </li></ul><ul><li>Ensure proper rent laws </li></ul><ul><li>Enforce zoning laws and city development plan </li></ul><ul><li>Increase land supply </li></ul><ul><li>Ensure flexibility of labor laws </li></ul>
  15. 15. Implications for India *Be ready *Be realistic *Be resilient