8. $220 BILLION and counting… Growing at 20% per annum SOURCE: MCKINSEY REPORT
9. Retail amongst the largest industries in India, With over 10% of country’s GDP & about 8% of employment 12 th largest economy in the world 4 th largest in purchasing-power parity terms Over 58% of Indian population below 26yrs. That is over 564 million people , nearly twice the total population of the United States Indian Retail Scenario Today
10. Modern Indian Retail Lifecycle Consumer demands Organized forms 2004 SECOND GEAR 2008 New retailers Driving growth 1993 FIRST GEAR Retailers strengthening Backend 2010 THIRD GEAR Retailers going global / M&A 2012 FOURTH GEAR CREATE AWARENESS INCREASE CLIENT EXPECTATION STRENGTHEN BACK END MANAGEMENT CONSOLIDATION SOURCE: KURT SALMON ASSOCIATES
11. Market & Composition Total No. of Retail stores in India 12-15 Million Hawkers 8-10 Million Grocery Outlets 4-5 Million Urban Grocery Outlets 1 Million Over 96% of Indian Retail is unorganized SOURCE: CII RETAIL
12. LARGER MALLS (1M Sq.ft) 2004-5 2000 Multiplex & Leisure Cinema Discount Stores MALLS 1990 MALLS (Price, Quality, Service & Entertainment) 1980 DEPARTMENTAL STORES (Price, Quality, Service Sensitive) BEFORE 1980 TRADITIONAL RETAIL (Price Sensitive) Market & Composition 4% rapidly evolving modern organized Retail
13. Characteristics of Unorganized Retail Retail Products : Mainly Food & Beverage Products, Staples, Cigarette, Personal Care Location : Residential Areas, Main Roads spread across the Indian geography Typical Size: Over The Counter, Occupies a space ranging from 100 - 750 sq ft. Retailer Characteristics : Uneducated Has loyal Clientele Retailing Characteristics : Over the counter sale Space limitation Home delivery Customer Profile : Lower to upper middle class
14. OUTLET: Grocers Mom & Pop Stores Approx. SIZE: 200- 500 sq ft Forms of Unorganized Retail
21. Large population of young spenders The shift from buying to the “shopping” experience Growing finance options Brand conscious & lifestyle products The Changing face of the Indian Consumer
22. India Profile by *IMF PPP per capita (2005*) (US$) 3,019 Population 2025 (Billion) 1.1 % Age <15 in 2005 36 % Age 15-64 in 2005 60 SOURCE: * INTERNATIONAL MONETARY FUND ESTIMATE
25. Law & Regulations Foreign Direct Investment allows 51% stake in single brands FDI allows international retailers in cash & carry ( Metro 100%) This law will be relaxed in the next 3 years Hopefully for gradual increase in ownership stake
26. International Retailers in India International Players Eyeing India Shoprite South Africa (Hypermarkets) Already in Landmark, Dubai (Lifestyle stores) Already in Marks & Spencer’s (Lifestyle stores) Already in Metro Cash & Carry (Wholesale Hypermarket) Already in Mango (Apparel Retailer) Already in Carrefour (Multiformat Retailer) Evaluating Wal Mart (Hypermarkets) 7-Eleven (Supermarkets) Evaluating Tesco Evaluating Starbucks Evaluating SOURCE: CYGNUS RESEARCH
27. Major Indian Players 6.7 billion USD invested in setting up multiple retail Formats. Sales expectation of 20 billion USD by 2010 RELIANCE Presently India’s largest retail company. 10 million sq ft of retail space expansion & expected sales 2 billion $ by 2008 PANTALOON Opening 50 hypermarkets of 4 million sq ft RPG Currently operating in lifestyle, books retail & hypermarkets Investing 100 million dollars in 55 hypermarkets by 2015 RAHEJAS Opening 150 lifestyle department stores by 2010 PYRAMID Expanding to 10 to 40 departmental stores by 2010. Also in hypermarkets & consumer electronic multi brand stores TATA
28. Current Scenario of Indian retail Proliferation of modern retail formats 400 new malls 1500 Supermarkets 350 Departmental Stores 50 Hypermarkets by 2008 100 MILLION Sq ft in retail space by 20102 15,000 small & big outlets to undergo facelifts
29. Opportunities Mall Management Visual Merchandizing & Store / Mall Planning Retail Education Shopper Research Retail Technology Signage & Graphics
30. Opportunities – Signage & Graphics From 30 to 100 large multi-brand consumer electronics & durables stores 20,000 sft. 6,000 products. 8 categories. INFINITI RETAIL INVESTMENT: Rs. 275 Cr in retail expansion. From 42 to over 150 over next 4 years . Prime strategy: to enter tier-III towns . FABINDIA INVESTMENT: Rs. 21 Cr in retail expansion. 1st phase: 30 Disney Jeans Stores by 2007 - 3 each in Delhi & Mumbai . 2nd phase: 50 stores by 2008. INDUS CLOTHING Mike Murjani to set up luxury niche in India with Tommy Hilfiger, Gucci, Jimmy Choo & Tumi . 40 free standing stores planned over 5 years LUXURY NICHE SEEKING: 50-20M Million Sft. Set to target 1,500 Indian cities RELIANCE RETAIL West Bengal Government to invest Rs. 100 Cr in vegetable retail chain. RETAIL CHAIN
31. Opportunities – Mall Management 200 existing malls 400 new malls 65 malls coming up in 1 street: Gurgaon, a high street near Delhi Specialized malls: Car, Jewelry, Weddings Emerging need for Mall Management Services.
32. MALL PLANNING Opportunities – Mall Management Services to Mall Developers MALL DESIGN DEVELOPMENT MALL FIT OUT & TENANT MIX GUIDELINES MALL TRAFFIC MANAGEMENT SYSTEM PLANNING MALL COMMUNICATION SYSTEM PLANNING
33. Opportunities – Mall Management Services to Retailers INTEGRATED MARKETING PROMOTIONS & VM CALENDAR CUSTOMER EXPERIENCE MANAGEMENT SERVICES IN-STORE WAYFINDING & COMMUNICATION STORE DESIGN & PRESENTATION
34. Opportunities – Store Design Existing stores have commonplace designs Growing popularity of Experience Shopping Emerging trend of new store design concepts with international brands Most new innovations in apparel stores Indian fashion labels setting up boutique stores Store fixtures in high demand
35. Opportunities – Store Design & Build Store design conversion & adaptation to International concepts Store designs for Indian Brands Shop fitting design & development: China emerging as source, India: needs to adapt
36. Opportunities – Visual Merchandizing VM design, execution & management for retail chains VM Academia Set-up
37. Opportunities – Marketing at retail (POP) POP strategy Design & Development POP Deployment & Maintenance Management
38. International Designers, Architects & Mall Planners in India JHP LONDON WD PARTNERS OHIO HELLMUTH OBATA KASSBAUM (HOK) Inc. NEW YORK CHUTE GERDEMEN OHIO SPAR Inc. NEW YORK: IN-STORE MERCHANDIZING BENTEL ASSOCIATES, SOUTH AFRICA
50. Scope for Retail Education 8 Million Retail jobs in the next 6 years More than 2 Million Skilled job opportunities by 2008 Need for quality education
51. Retail Training Increasing Modern Retail Outlets 100 Million sq ft Increasing Demand of Skilled people 8 Million Jobs Huge shortage of Skilled people
52. Retail Training – The Opportunity Despite perception of huge people availability Skilled People in retail is at premium Large Indian retailers have in-house training departments… this whole area can be outsourced
53. Few schools today have national presence in Retail Design National Institute of Design National Institute of Fashion Design (affiliated to the Birmingham Institute of Art & Design) Retail Design – The Opportunity
54. Retail Education – The Opportunity Opening of professional Retail training academy National Footprint For the academy Training based on Global Practices International Visiting Faculty
55. Retail Education – Immediate Opportunities Real Estate Management Visual Merchandising Design School Store Design Institute Retail Operations Management
56. Retail Research – The Opportunity As retail grows the Indian shopper is becoming more and more savvy understanding the Indian shopper is key There is an untapped need for shopper research agencies
57. Retail Technology – The Opportunity Large players in the organized retail are using technology from companies like JDA, IBM, Wincor Nixdorf & Bizerba Various in-store technologies like POS, Narrow casting, Digital Signage's have a huge market
58. Retail Supply Chain The market size for logistics spend in India is $50 billion per annum, which is about 13% of the country's GDP Logistics cost for manufactured goods in the country accounts for almost 30% of the total cost Huge opportunity for supply chain solution providers, as the international standard for logistics costs ranges between 5% & 10% Companies like Bax GLobal, Manugistics, DHL, have already set up shop in India
59. Issues Facing The Indian Retail Industry Retail has no Industry status Fragmented supply chain Regional & Seasonal Differences Non availability of quality retail space Non availability of skilled people Lack of Infrastructure
60. Entry Challenges Need long term perspective & financial Staying power Cultural adaptability in working Style: Cannot transplant western retail practices To develop an ability to deal with govt. red tape (Improving Rapidly) India is a regionally diverse market 29 states, 18 official Languages 325 spoken languages… a marketers challenge
61. The Positioning Challenge The Location Challenge The Format Challenge The Manpower Challenge The Viability Challenge The challenges of Indian retail
62. The Positioning Challenge Positioning on range Position on price Position on convenience Position on store experience
63. Positioning mix of store retail brands Price Convenience Range Experience Disney Store Range Experience Price Convenience McDonald's Price Experience Range Convenience Nordstrom Experience Range Convenience Price Dollar General Price Convenience Range Experience Starbucks Convenience Experience Price Range Zara Experience Convenience Range Price Wal-Mart Qualifying Competitive Supporting Differentiating Retail Brand
64. The Positioning Challenge qualifying competitive Supporting Differentiating Retail Brand Price Subiksha Price Wal -Mart Price More Price Food world Price Reliance Fresh Price Big Bazaar
65. The biggest challenge for these retailers is on how to differentiate. There can only be one or two winners on best price position The Positioning Challenge
66. The Location Challenge Lack of availability of stores locations convenient to shopper The infrastructural problems to get to a store The rising cost of leasing Mad rush to open stores contributing to increased cost
67. The Format Challenge Multiple formats being experimented on which are the few formats that will be future Convenience versus supermarkets versus hypermarkets Size versus experience versus viability Specialty stand alone stores to formats in malls and hypermarkets
69. Source: Mindscape By 2013, Modern Retail would have reached at least top 600 Indian cities and towns
70. The Manpower Challenge Big disconnect between quality of personnel and customer experience desired Floor Personnel, Managing staff, visual merchandisers big - gap in skill sets required Where is retail going to find skilled personnel when there is a total lack of organized training and understanding of the consumer experience desired
71. The Viability Challenge The biggest question? Is Modern Retail Viable if so over what period of time Will there be a fall out ? Who will survive? Is the path leading to mergers and acquisitions? Where are we heading?
