Arvind Singhal


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  • Arvind Singhal

    1. 1. Organized Retailing Challenges & Opportunities ! Arvind Singhal Chairman – KSA Technopak TIEcon 2003 New Delhi 18 th December 2003
    2. 2. Structure of the presentation <ul><li>Changing India & Change Drivers </li></ul><ul><li>Opportunities in Retail (in India) </li></ul><ul><li>Emerging Trends : Retailing </li></ul><ul><li>Winnable Practices: </li></ul><ul><ul><li>Retailer - Consumer Interface </li></ul></ul><ul><ul><li>Retail Operations </li></ul></ul><ul><ul><li>Retailer – Supplier Relationship </li></ul></ul>
    3. 3. Changing India & Key Drivers of Change
    4. 4. Many Drivers <ul><li>Demographics </li></ul><ul><li>Increased Global Exposure </li></ul><ul><li>Increased Discretionary Incomes across wider spectrum of population, across wider geography </li></ul><ul><li>Changes in Lifestyle </li></ul>
    5. 5. Many Drivers <ul><li>Demographics </li></ul><ul><li>Increased Global Exposure </li></ul><ul><li>Increased Discretionary Incomes across wider spectrum of population, across wider geography </li></ul><ul><li>Changes in Lifestyle </li></ul>
    6. 6. Demographics <ul><li>Youngest Population in the world </li></ul><ul><ul><li>Over 65% of population below 35 Years old </li></ul></ul><ul><ul><li>Over 50% of population below 20 Years old </li></ul></ul><ul><li>Contrast with: </li></ul><ul><ul><li>Europe : Declining in many countries (Russia, Italy) </li></ul></ul><ul><ul><li>USA : Immigration helping in holding up the growth </li></ul></ul><ul><ul><li>Japan: Aging and soon to decline </li></ul></ul><ul><ul><li>China: Currently young but sharp aging to set in next 20 years </li></ul></ul>
    7. 7. Working population is growing unlike other countries <ul><li>Rise in the middle would expand opportunities as 20-49 is the best segment for most retailers and consumer good marketers </li></ul>
    8. 8. <ul><li>Both ability to pay and the willingness to pay constitute “Demand” </li></ul>Working population driving consumerism       Figures in % Source: Statistical Outline of India Ability to pay Willingness to pay
    9. 9. Demographics <ul><li>Young Population has no : </li></ul><ul><ul><li>Baggage of the past </li></ul></ul><ul><ul><li>Nehru, Gandhi, Partition etc. are “ things you read in history books ” much the same way you read </li></ul></ul><ul><ul><li>Born in an era of more open consumerism </li></ul></ul><ul><ul><li>New Generation icons are modern achievers (Bill Gates, Narayan Murthy, Sachin Tendulkar, Shahrukh Khan, Aishwarya Rai etc.) </li></ul></ul>
    10. 10. Demographics <ul><li>Young Population : </li></ul><ul><ul><li>Is Confident and Optimistic about their Future </li></ul></ul><ul><ul><li>Is Willing to experiment </li></ul></ul><ul><ul><li>Has “transient” loyalties to Brands </li></ul></ul><ul><ul><li>Admires & Appreciates “Youth” and “Modernity” </li></ul></ul>
    11. 11. Many Drivers <ul><li>Demographics </li></ul><ul><li>Increased Global Exposure </li></ul><ul><li>Increased Discretionary Incomes across wider spectrum of population, across wider geography </li></ul><ul><li>Changes in Lifestyle </li></ul>
    12. 12. Increased Global Exposure <ul><li>The young Indian population has an unparalleled exposure to the outside world on account of various factors: </li></ul><ul><ul><li>75% or more have access to Color TV </li></ul></ul><ul><ul><li>More than 250,000 Young IT and Other Professionals have worked “On-Site” in any given year in North America, Europe and Japan </li></ul></ul><ul><ul><li>Over 80,000 Indian students are currently studying in the US, UK, Australia and other Countries </li></ul></ul><ul><ul><li>Over 150,000 Indian’s currently working in BPO / ITES area, vicariously getting some exposure to “life” outside India </li></ul></ul>
    13. 13. Increased Global Exposure <ul><li>Multiplier effect of this exposure – due to the close knit nature of Indian society – is far in excess of what these absolute numbers may show </li></ul><ul><li>Real Impact is already being seen in a number of ways: Majority of new entrepreneurial business start-ups are now from first generation, very young entrepreneurs </li></ul><ul><li>Likewise, average age of the successful fast track senior managers in successful companies already down to late 20’s / early 30’s since the young are perceived as more “global” and “dynamic” </li></ul>
    14. 14. Increased Global Exposure <ul><li>Far quicker adoption to “global” trends and lifestyles and products / services </li></ul><ul><li>Substantially higher expectations on delivery of “value” from the products and services </li></ul><ul><li>Far more assertive consumers! </li></ul>
    15. 15. Many Drivers <ul><li>Demographics </li></ul><ul><li>Increased Global Exposure </li></ul><ul><li>Increased Discretionary Incomes across wider spectrum of population, across wider geography </li></ul><ul><li>Changes in Lifestyle </li></ul>
    16. 16. Increased Discretionary Incomes.. <ul><li>Interesting phenomenon of not only “Double Income” families but “multiple income” families: </li></ul><ul><ul><li>Young professionals in new generation services e.g. IT, Retail, Food Services, Finance and Insurance Services etc. are in age profile of 20 – 28 and are typically still staying with the Parents (who may have their own parents still staying with them) </li></ul></ul><ul><ul><li>Only one House Rent Cheque to be made, and only One kitchen to run </li></ul></ul><ul><li>Substantially more spending power available than reflected by mere “per capita” income indicators </li></ul>
    17. 17. Increased Discretionary Incomes.. <ul><li>Spending further enhanced by increased risk-appetite for credit (in turn, reflected in the confidence of the “youth”) </li></ul><ul><li>Personal Credit off take has increased from about Rs 50,000 Crores in 2000 to about Rs 160,000 Crores in 2003 giving an unprecedented boom to high ticket item purchases e.g. durables, automobiles and housing </li></ul><ul><li>Increased “Globalization” of high end employment (to augment the low end employment in the Gulf) further spreading availability of spending power to beyond the main Metro’s and Mini Metro’s </li></ul><ul><li>Next round of ITES shall take employment to hinterland of India e.g. Dehradun, Chandigarh, Jaipur, Goa : locations having availability of graduate, English speaking young adults at low cost </li></ul>
    18. 18. Many Drivers <ul><li>Demographics </li></ul><ul><li>Increased Global Exposure </li></ul><ul><li>Increased Discretionary Incomes across wider spectrum of population, across wider geography </li></ul><ul><li>Changes in Lifestyle </li></ul>
    19. 19. Changes In Lifestyle.. <ul><li>With the advantage of Youth, More Globalization, and Better Discretionary Spending incomes, lifestyle changes provide multiple new opportunities in terms of: </li></ul><ul><ul><li>New Products and Services (e.g. Ready to Eat Food, Entertainment Centers, Time / Labor Saving devices and services e.g. Washing Machines etc.) </li></ul></ul><ul><ul><li>New Channels of Distribution (e.g. Malls, Multiplexes, Home Delivery and Multi-Level Marketing etc.) </li></ul></ul><ul><ul><li>New Value Propositions in terms of Fashion, Convenience, Reliability, Quality etc. rather than merely “Price” </li></ul></ul>
    20. 20. Opportunities in Retail Increasing by the day !
    21. 21. Many Missing / Under Served Categories <ul><li>Food & Grocery / Food Services </li></ul><ul><li>Furniture & Furnishings </li></ul><ul><li>Consumer Durables </li></ul><ul><li>Specialty e.g. </li></ul><ul><ul><li>Children’s Wear / Accessories / Toys </li></ul></ul><ul><ul><li>Footwear </li></ul></ul><ul><ul><li>Health, Beauty & Well-Being </li></ul></ul><ul><ul><li>Lingerie & Intimate Apparel </li></ul></ul><ul><ul><li>Sports / Outdoor Goods / Leisure Hardware </li></ul></ul>
    22. 22. Many Missing / Under Served Formats <ul><li>Discounters / Mass Merchants </li></ul><ul><li>Specialty : Category Killers </li></ul><ul><li>Catalog </li></ul><ul><li>Factory Outlets / Malls </li></ul><ul><ul><li>Etc. </li></ul></ul>
    23. 23. Emerging Trends in Retail (In Indian Context)
    24. 24. Implications for Indian Retailers <ul><li>Size Matters! </li></ul><ul><li>Competition shall be on Global level </li></ul><ul><li>Flexibility in Format Development & Product Category Selection shall be a Key Success Factor </li></ul><ul><li>Global Supply Chain Development shall also be a Key Success Factor </li></ul>
    25. 25. Winning Retail Propositions of Tomorrow…. Differentiation opportunity Time Retail Strategies revolve around these basic factors Many Opportunities …… Price Product Service <ul><li>Lower Cost </li></ul><ul><li>Perceived Value for Money </li></ul><ul><li>Quality </li></ul><ul><li>Uniqueness </li></ul><ul><li>Range </li></ul><ul><li>Availability </li></ul><ul><li>Ambiance </li></ul><ul><li>Convenience </li></ul><ul><li>Privileges </li></ul><ul><li>Location </li></ul>
    26. 26. ….But Will Change Over Time <ul><li>While Product differentiation would play a significant role, the gap will diminish due to ease in global sourcing for all competitors </li></ul><ul><li>Experience in terms of the Look and Feel of the Store would be important, but again, the gap will diminish over time </li></ul><ul><li>Superior Price - Value offerings would continue to be a major differentiator </li></ul><ul><li>Additionally, Convenience of “Proximity” & “Appropriate Assortment” would emerge soon as a differentiator and initiate opening of small footprint stores (as chains) as well as Catalog / Internet shall make a major Impact even in India </li></ul>
    27. 27. Organized Retail Poised To Boom … <ul><li>Many enablers: </li></ul><ul><ul><li>Frenetic development of high quality retail space across India </li></ul></ul><ul><ul><li>Increased interest of Investors in funding Retail projects </li></ul></ul><ul><ul><li>Increased interest of International Brands & Retailers to enter India </li></ul></ul><ul><ul><li>Exceptional response of Indian consumers to “modern” retail options </li></ul></ul>
    28. 28. Best Practices ?
    29. 29. Best Practices ….. <ul><li>Changes far too recent to allow emergence of true “best practice” examples in India </li></ul><ul><li>Adapting “global” best practices in the Indian business environment a bit premature at this juncture ( either the consumer is not ready with spending power or the business does not yet have the management and financial resource ) </li></ul><ul><li>Hence, at this stage, look at “ winnable ” practices in the Indian context </li></ul>
    30. 30. Winnable Practices (In Indian Context) Retailer – Consumer Interface
    31. 31. Retail – Consumer Interface <ul><li>Location </li></ul><ul><ul><li>As close to home as feasible for most product categories </li></ul></ul><ul><li>Ambience </li></ul><ul><ul><li>Cleanliness, Climate Control </li></ul></ul><ul><ul><li>Self Service </li></ul></ul><ul><li>Assortment </li></ul><ul><ul><li>Focused for specific consumer segments </li></ul></ul>
    32. 32. Retail – Consumer Interface <ul><li>Availability </li></ul><ul><ul><li>Right Product </li></ul></ul><ul><ul><li>Right Size / Style / Color </li></ul></ul><ul><li>Information </li></ul><ul><ul><li>Signage </li></ul></ul><ul><li>Speed of Service </li></ul><ul><ul><li>Information </li></ul></ul><ul><ul><li>Check-Out </li></ul></ul><ul><li>Return & Exchange Policy </li></ul>
    33. 33. Winnable Practices (In Indian Context) Retail Operations
    34. 34. Retail Operations <ul><li>IT Enabled </li></ul><ul><ul><li>Demand Forecasting </li></ul></ul><ul><ul><li>Merchandise Planning & Management </li></ul></ul><ul><ul><li>Replenishment </li></ul></ul><ul><ul><li>Price Optimization </li></ul></ul><ul><li>Efficiencies at POS </li></ul><ul><li>Dynamic Category / Brand Management </li></ul><ul><li>Private Label Strategy & Efficiencies </li></ul>
    35. 35. Winnable Practices (In Indian Context) Retailer – Supplier Interface
    36. 36. Collaborating With Buyers Technology allows supply chain members to collaborate in: Degree of business impact Implementation (standards and volatility) LOW HIGH EASY DIFFICULT Product tracking POS Fashion / Lifestyle trends Planning forecasting Product design Product specs KSA analysis
    37. 37. To Conclude …..
    38. 38. Key Messages <ul><li>India & Indians are changing rapidly </li></ul><ul><li>Understanding Consumer critical in spotting new opportunities in Retail </li></ul><ul><li>Conditions conducive for rapid growth of organized retail </li></ul><ul><li>Many opportunities – categories and formats! </li></ul>
    39. 39. Thank You !
    40. 40. Arvind Singhal Chairman KSA Technopak India Pvt Ltd. A-5 Pamposh Enclave New Delhi 110 048 Phone : +91-11- 2629 1111 Fax : +91-11- 2629 1112 Email : [email_address] Web : & For further dialogue, please contact : © KSA•Technopak