Emerging Retail formats in India


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Marketing: A presentation on the trends observed in the Indian organized retail sector over the years and how it has helped in the economic growth in India.

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  • Trade activities undertaken by licensed retailers : those who are registered for sales tax, income tax
  • Emerging Retail formats in India

    1. 1. EMERGING RETAIL FORMATS IN INDIA PAST, PRESENT & FUTURE LBSIM, DELHI 1st Year Rinky Sachdeva Rohit Jain Atul Mathur Munish Mittal Aditya Goel Satyam K. Saxena
    2. 2. FLOW OF PRESENTATION • Introduction • Evolution of Indian retail • Emerging Trends • Research • Future Retail • Shoppers Stop • FDI in Retail- Present & Future Scope • Conclusion
    3. 3. ‚Retailing includes all the activities involved in selling goods or services directly to final consumers for personal, non-business use‛ - Philip Kotler
    4. 4. INTRODUCTION • Indian retail industry is worth 500bn $ • Indian retail sector accounts for 22% of India’s GDP • Contributes 8% to total employment Source: Report named ‘Retail Sector in India’ by Research And Markets
    5. 5. TYPES OF RETAIL • Organized : Trade activities undertaken by licensed retailers • • Expected coverage by 2020: 20% • Expanding at 20% per annum • • Current retail penetration: 8% Rapid urbanization with increasing purchasing power, easy credit availability, policy support by government, increasing investments. Unorganized: Outlets run locally by the owner or a care taker of the shop- unlicensed. • Current retail penetration: 92% • Low technical and accounting skills required Source: Technopak Aranca Research- 2012
    6. 6. EVOLUTION OF INDIAN RETAIL Consolidation Expansion Conceptualisation 2010 onward 2005–10 • 1990–05 Initiation • Pre 1990s • • Pure play retailers realised the potential of the market Most of them in apparel segment • Entry in food and general merchandise category Repositioning by existing players Manufacturers opened their own outlets Source: Technopak Advisors Pvt Ltd, Aranca Research • • • • FDI in single-brand retail up to 100 per cent from 51 per cent Approval of FDI limit in multi-brand retail up to 51 per cent Rise in private label brands by retail players Increasing investments in retail infrastructure
    7. 7. EMERGENCE OF ONLINE RETAIL • • • India has 3rd highest number of internet users Growing @40% per year Present contribution of online retail: 0.5% Source: Report by COMSCORE for ASSOCHAM- 2013
    8. 8. ONLINE RETAIL • Young population aided by easier access to credit and payment options; increasing internet penetration and speed, 24-hour accessibility, convenient and secured transactions • Computer peripherals, camera and mobiles, and lifestyle segments account for a majority of total purchases • Projected to increase from 0.6bn US$ in 2011 to 70bn US$ in 2020 Source: MasterCard worldwide insights- 2011
    9. 9. EMERGING RETAIL FORMATS • SPECIALTY STORES  typical specialty store gives attention to a particular category and A provides high level of service to the customers  For example if a customer visits a Reebok or Gap store then they find just Reebok and Gap products in the respective stores. • DEPARTMENT STORES  retailer of such store carries variety of categories and has broad A assortment at average price & offer considerable customer service  For example: Food World in Bangalore
    10. 10. • DISCOUNT STORES  Offers extensive assortment of merchandise at affordable and cut-rate prices  Normally retailers sell less fashion-oriented brands  The service is inadequate  For example: The Loot • CONVENIENCE STORES  essentially found in residential areas Is  Provide limited amount of merchandise at more than average prices with a speedy checkout  Store is ideal for emergency and immediate purchases  For Example: Reliance Fresh
    11. 11. • HYPERMARKETS: Approx 21% of retail space by 2014 • Provides variety and huge volumes of exclusive merchandise at low margins  Operating cost is comparatively less than other retail formats  For Example: Dmart , Big Bazaar, Trent, Landmark, Star Bazaar • SUPERMARKETS  self-service store consisting mainly of grocery and limited products on a non food items  may adopt a Hi-Lo or an EDLP strategy for pricing  supermarkets can be anywhere between 20,000-40,000 square feet  For Example: SPAR™ supermarket
    12. 12. • MALLS  Has a range of retail shops at a single outlet  Endow with products, food and entertainment under a roof  For Example: Inorbit Mall, Ambience Mall. • E-TAILERS  Customer can shop and order through internet and the merchandise are dropped at the customer's doorstep  Format is ideal for customers who do not want to travel to retail stores and are interested in home shopping  For Example: Amazon and Ebay
    13. 13. FUTURE GROUP: The Walmart of India Future Retail Ltd (FY12) • Revenue: USD2.7 billion • Operational retail space:16.3 msf • Over 1000 stores in 121 cities • Employees: 36,000
    14. 14. Contd… • It’s a flagship company of Future Group • Multiple retail formats: hypermarkets & supermarkets • A network of more than 315 stores encompassing an area of over 11 million square feet. • Under Future Fashion, the company owns a portfolio of 24 leading brands and covers more than 121 cities • Revenues expanded at a robust CAGR of 22.7 per cent during FY08-12
    15. 15. SHOPPERS STOP: A case at hand • Shoppers Stop Ltd., a pioneer in modern retailing in India, has been promoted by K Raheja Corp. Group, one of the leading groups in the business of real estate development and hotels in the country. • Shoppers Stop and its associate companies are involved in retailing through department stores, specialty stores, entertainment zones and large hypermarkets. • The company owns 172 stores in 25 cities with 4.81 million sq ft space across eight store formats • Over 2.5 million customers are a part of the First Citizen Loyalty Programme • Centralized buying for all products except cosmetics and perfumes to avoid sales tax
    16. 16. INDIAN RETAIL TO BENEFIT FROM FDI  In 1991, India shifted to New Economic Policy and allowed for international trade and investment, deregulation, initiation of privatization, etc  FDI upto 51% allowed under automatic route in selected sectors.  India in 1997 allowed foreign direct investment (FDI) in cash and carry wholesale.  FDI upto 51% allowed in single brand retail with prior govt. Approval.  In 2008-09, FDI stood at $27.3 billion.  In 2012-13, FDI dropped to $22.4 billion
    17. 17. FDI POLICY DETAILS ON INDIAN RETAIL SECTOR • Until 2011, Indian central govt. denied FDI in multi-brand Indian retail • On 24 November 2011, India allowed foreign groups to • own up to 51 % in multi-brand retailers • own 100 % for single brand retailers, from the previous cap of 51% • More recently, there have been relaxations in some norms so that a company can invest in cities having population of less than 10 lakhs • The cap for 30 % sourcing regulation from local market has been increased from 1mn to 2mn USD
    18. 18. FORMS OF FDI IN INDIAN RETAIL • Joint Ventures • Franchising • Cash & carry operations • Non-store formats • Sourcing of supplies from small scale sector
    19. 19. GROWTH OPPORTUNITIES IN INDIAN RETAIL INDUSTRY Large number of retail outlets Rural markets offer significant growth potential Private label opportunities • India is the fifth largest preferred retail destination globally • The sector is experiencing exponential growth, with retail development taking place not just in major cities and metros, but also in Tier-II and Tier-III cities • FMCG players are focusing on rural market as it constitutes over 33 per cent of FMCG consumer base in India • With increasing investment in infrastructure, retailers will be able to increase their access to high-growth potential rural market • The organised Indian retail industry has begun experiencing an increased level of activity in the private label space • Private label strategy is likely to play a dominant role as its share in the US and the UK markets is 19 per cent and 39 per cent, respectively while its share in India is just 6 per cent
    20. 20. ATTRACTIVE INVESTMENT SEGMENTS • Retail component of real estate is an attractive opportunity which is currently attracting 29 per cent of total investment in real estate • 26 per cent of the overall investors are interested in investing in Tier II and III cities • Training and warehouse spacing are the other viable options for investments
    21. 21. CONCLUSION • Emerging retail formats offer an ideal shopping experience with an amalgamation of product, entertainment and service • The hypermarkets, malls, supermarkets are the preferred kind of stores by consumers • The dynamics of the demographics, double income, urbanization and internet revolution are the factors contributing to retail growth in India • Younger generation prefer to visit malls and hypermarkets more for stress relieving purpose