GROWTH IN CONSUMER CONSUMPTION Consumption will grow 4x over 2005 – 2025. Urban India will account for more than two-thirds of this growth as urban household income will grow 3.3x over the same period. Aggregate annual consumption (Bln, Indian rupees, 2000) 80,000 71,504 70,000 60,000 50,000 40,000 35,913 30,000 18,896 20,000 16,695 10,000 0 1 Rural Urban All India All India consumption consumption consumption consumption growth growth 2025 2005Source: MGI India Consumer Demand Model, v1.0
GROWTH IN CONSUMER CONSUMPTION Consumption will grow 4x over 2005 – 2025. Urban India will account for more than two-thirds of this growth as urban household income will grow 3.3x over the same period. Aggregate consumption per Urban Household (Indian rupees, 2000) 400,000 378,170 350,000 6.1% 300,000 250,000 208,406 200,000 150,000 2.9% 115,620 100,000 86,351 65,416 50,000 0 1 1995 2005E 2015F 2025F 1985Source: MGI India Consumer Demand Model, v1.0
URBAN CLASSIFICATION AND FOCUS OF ORGANIZED RETAIL Urban areas are classified into four types depending on population. Traditionally, organized retail chains focus on tier 1, 2 and tier 3 (limited). There is a clear gap when it comes to Tier 4 cities. Bangalore Surat Ludhiana Tiruchirapalli Rohtak Hyderabad, Kanpur Madurai Amritsar Rurkela Mumbai Nagpur Bhopal Faridabad Udaipur Kolkata Lucknow Patna Aurangabad Anand Delhi Jaipur Nasik, Allahabad Gwalior Faizabad Chennai Kochi Agra Jodhpur Hassan Ahmadabad Vadodara Varanasi Raipur Shimla Pune Indore Rajkot Bhubaneswar Roorkee Shillong Tier 1 Tier 2 Tier 3 Tier 4 Major cities Mainstream cities Climbers Large towns 8 cities 26 cities 33 cities 33 cities Population > 4 million Population > 1 million Population > 500,000 5,094 towns* Population for each city estimated using the average urban household sizeSource: The Great Indian Middle Class, NCAER; MGI India Consumer Demand Model (v1.0); MGI analysis
POTENTIAL IN TIER 4 CITIES 40% of total disposable income is generated in Tier 4 cities Total Households Average income per household Total disposable income (million, (share)) (1000, Indian Rupees) (Bin, Indian Rupees (share)) 186 3,034 16(29%) Tier1 (39%) Major cities 129 Tier1 Tier1 Major cities Major cities 1,064 8(15%) Tier2 (14%) Mainstream cities Tier2 136 Tier2 Mainstream cities 670 Mainstream cities 5 (9%) Tier3 Climbers Tier3 Tier3 114 Climbers Climbers 3,009 27 (39%) Tier4 Tier4 Tier4 Large towns Large towns Large townsNote: Disposable Income estimated using income distribution of households from NCAER and model estimates of average household income;Figures are rounded to the nearest integer and may not add up to 100% Source: The Great Indian Middle Class, NCAER; MGI India Consumer DemandModel, v1.0; MGI analysis
SUMMARY OF OPPORTUNITYThis leaves a huge unmet demand in serving the needs of affluent customers in smaller towns. Existing ‘mom-and-pop’ stores are not able to meet the demands of affluent customers in towns. Organized retail chains are yet to penetrate these towns. Ecommerce is not yet a viable channel given that customers are not tech savvy, psychological barriers and limited infrastructure.
FABMART – TARGET SEGMENT The key focus of FabMart by MRPL is to address the needs of affluent customers in Tier 3 and 4 cities. FabMart by MRPL by MRPLFocus of FabMart by MRPL Organized retail Key success factors to serve affluent Deprived customers in towns •1 Product availability – A wide range of products and services should be available. Aspirers •2 Convenience – The process of shopping should be convenient and fun. Seekers •3 Confidence – Customer should trust the seller and the brand. •4 Operational control – A high quality of Strivers customer experience needs to be ensured with a tightly managed service delivery model. •5 Lean & scalable model – Since volumes will Globals be low in any given town, the model should be lean but highly scalable. Tier 1 Tier 2 Tier 3 Tier 4
COMPETITIVE ANALYSIS In the target towns Shopping from E-commerce Mom & Pop stores Large format retail adjacent cities • The typical • Large format retail • E-commerce chains • Customers going to mom-and-pop store stores that are such as the nearest city to buyComments serving customers in occasionally seen in Flipkart, Myntra etc. goods that are not the town some tier 3/4 towns normally available Pros: Pros: Pros: Pros: • Convenience • Convenience • Variety and good deals • All the benefits • Trust • Trust of a typical LFR store • Instant • Instant gratification Cons: gratification • Variety and deals • Various links in the Cons:Value value chain (from a small• Involves priorproposition Cons: Cons: town point of view) planning and travelto the • Limited variety • Is not present in most are not yet mature i.e. • Returns are not • May not be of the target towns Technology, Logistics, P possible if the city iscustomer the best deals ayments etc., located at a distance • Trust deficit • Familiarity with online shopping required • No touch-and-feel experienceComparative • Low-Medium • Low • Low-Medium • HighThreat
ABOUT FABMART BY MRPLFabMart by MRPL aims to simplify shopping for customers in smaller towns in India while offering them an unmatchedonline shopping experience. We are the only company in India that is exclusively focused on catering to customers insmall towns by bringing in a wide range of products offered by a multitude of brands.We want to combine our industry expertise, technology know how to offer our customer in towns two things: Fastest andbest e-commerce experience, and Timely delivery in the towns.The TeamAlphonse Reddy Founder & CEO, 12 years industry experience spanning sales, marketing, strategy and finance. BE (BITS, Pilani) and MBA (INSEAD Business School)Investors/Advisory TeamHemu Javeri Executive Director, Forum Synergies, a $150m PE fund. Previously CEO of Madura Garments, Nike and Home Solutions.Anand Morzaria CEO of Pennywise Solutions. MSc Finance (BITS, Pilani)Ashish Agarwal Investment Director, Navis Capital, a $3b PE fund. MBA (INSEAD Business School)