SANDESH GHOSAL                1



       IIPM AHMEDABAD 09-11
FLOW OF PRESENTATION


                  EVOLUTION OF RETAIL

                  ADVANTAGE – INDIA

                   MARK...
EVOLUTION OF RETAIL INDUSTRY

Weekly Markets, Village & Rural Melas



  Convenience Stores, Mom n Pop Stores /
          ...
ADVANTAGE – INDIA

• Ranked 1st – Global Retail Development Index 2009
• 5th largest destination globally
• Estimated grow...
MARKET OVERVIEW

• Annual Turnover - $ 37 billion

• Retail Industry - $350 billion

• 10% growth every year

• 7% populat...
CHANGING PARADIGM
                                                               2011
                                2008...
RETAIL OPTIONS DURING SLOWDOWNS

       Private Labeling


       Migrate towards Tier II & III cities & rural integration...
INSTRUMENTS FOR RETAILER
                 PROMOTIONS

                     PROMOTIONS

                                   ...
. . . contd

                  CITIES                              CHARACTERISTICS

TIER 1         Bangalore            We...
RURAL RETAIL IN INDIA

• Contributes major chunk

• 70% population lives in rural

• Spectrum of opportunities – rural ret...
PROBLEMS in BOOMING RURAL INDIA

• Absence of physical communication facilities

• Huge Power problems

• Lack of proper m...
CHANGING FACE

• Life style pattern – India’s middle class population changing

• “Saving” to “Spending” pattern

• Marked...
KEY PLAYERS IN INDIA

• Pantaloons Retail India
• Shopper’s Stop ltd
• RPG Enterprises
• Landmark Group
• Madura Garments ...
SOME OF MNCS IN INDIA

• United Colors of Benetton - Italy

• Arrow – USA

• Levis - USA

• Lee - USA

• Pepe Jeans - Lond...
KEY OPPORTUNITIES

• Wedding Malls

• Khaadi Plaza – 7000 outlets are to be launched

• Initiative Gujarat – Village Malls...
REVENUES & SHARES OF VERTICALS




 Food &     Clothing    Consumer   Jewelry &    Home       Beauty                 Books...
SWOT ANALYSIS

                   STRENGTHS                                     WEAKNESS
•   Young Population             ...
INITIATIVES BY CORPORATES

   1. Arvind Mills – focus Rural Retail
Focus on direct selling

Shop –in-shop stores double to...
RETAILING @ BOP

                                                Population in Billions

                              TIE...
Urban Areas
                                                      have become a
                                          ...
HUL – MICRO RETAILING

• 1999 start up – 6 new growth opportunities

• Confectionaries & sweets – candy fastest growing pr...
PROJECT SHAKTI - HUL

• Women’s Self Help Groups – Entrepreneur Development training
• Educating consumers on health & hyg...
ITC E-CHOUPAL – PROFITABLE RURAL
        TRANSFORMATION
• States covered – 10
• Villages covered – 40,000
• # of e-Choupal...
E-RETAILING

•    E-commerce classification:

a.      B2C – online selling by business unit to an individual consumer

b. ...
IIPM AHMEDABAD 09-11   25
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Retail In India

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Retail Snapshot

  1. 1. SANDESH GHOSAL 1 IIPM AHMEDABAD 09-11
  2. 2. FLOW OF PRESENTATION EVOLUTION OF RETAIL ADVANTAGE – INDIA MARKET OVERVIEW CHANGING PARADIGM RETAIL OPTIONS DURING SLOWDOWN RURAL RETAIL IN INDIA CHANGING FACE KEY OPPORTUNITIES SWOT ANALYSIS IIPM AHMEDABAD 09-11 2
  3. 3. EVOLUTION OF RETAIL INDUSTRY Weekly Markets, Village & Rural Melas Convenience Stores, Mom n Pop Stores / Kirana Stores PDS Outlets, Khadi Stores, Cooperatives Exclusive Brands Outlets, Hyper & supermarket department stores & shopping malls IIPM AHMEDABAD 09-11 3
  4. 4. ADVANTAGE – INDIA • Ranked 1st – Global Retail Development Index 2009 • 5th largest destination globally • Estimated growth – US $ 573 billion 2012 – 13 • Growing @ CAGR – 28% • Provides employment – 8% India’s working population • Home – largest base of consumers • Young Population – under 35 years age & 60% population in working age • Home to 20% global population under 25 years of age • Abundant availability of skilled workers IIPM AHMEDABAD 09-11 4
  5. 5. MARKET OVERVIEW • Annual Turnover - $ 37 billion • Retail Industry - $350 billion • 10% growth every year • 7% population – engaged retailing • Indian Retail Market – dominated by unorganized sector • Organized sector – big cities • Out of 10 companies – 6 from USA & 4 from UK IIPM AHMEDABAD 09-11 5
  6. 6. CHANGING PARADIGM 2011 2008 2005 4th Phase – M & A, Consolidation, High 3rd Phase – Investments, Confluence of 2000 Technology Adoption, Indian Retail Leveraging traditional 2nd Phase – formats for modern retail Range, Portfolio Format Options, beginning of the 1st Phase – rural – urban retail merge Entry, Growth, Expansion Top Line focus for organized retail Source: Ernst & Young IIPM AHMEDABAD 09-11 6
  7. 7. RETAIL OPTIONS DURING SLOWDOWNS Private Labeling Migrate towards Tier II & III cities & rural integration Negotiations Supply Chain & inventory management Sales Promotions with focus on long run stability Franchising Extensive use of information & technology Integrated CRM IIPM AHMEDABAD 09-11 7
  8. 8. INSTRUMENTS FOR RETAILER PROMOTIONS PROMOTIONS NON – PRICE PRICE PROMOTIONS PROMOTIONS Trade promotions “Supportive” Non Price “True” Non – Price Promotions Promotion Packs Promotions Loyalty Discounts Coupons Rebates Others POS Advertising Samplings Advertising in other media Premiums Displays Sweepstakes POS Materials Events Promotion Packaging Others Others IIPM AHMEDABAD 09-11 8
  9. 9. . . . contd CITIES CHARACTERISTICS TIER 1 Bangalore Well established real estate market & well known demand drivers TIER II Chennai, Pune, Experiencing growing demand, investments & real Hyderabad, Kolkata estate markets. TIER III Chandigarh, Real estate market yet to mature, immense Ludhiana, Lucknow, potential for demand Guwahti, Bhuvneshwar, Surat, Nagpur, Indore, Jaipur, Goa, etc. . . IIPM AHMEDABAD 09-11 9
  10. 10. RURAL RETAIL IN INDIA • Contributes major chunk • 70% population lives in rural • Spectrum of opportunities – rural retailing to luxury retailing • 4P’s to 4A’s – availability, Affordability, Acceptability & Accessibility • Microfinance concept emerging – ITC e-choupal, HUL’s Project Shakti, etc. IIPM AHMEDABAD 09-11 10
  11. 11. PROBLEMS in BOOMING RURAL INDIA • Absence of physical communication facilities • Huge Power problems • Lack of proper mass media & communications. • Underdeveloped & poor people • Completely unorganized & immature market • Seasonal demands • Illiterate & Uneducated people – slow to change • Farmers – lively hood depends on monsoon IIPM AHMEDABAD 09-11 11
  12. 12. CHANGING FACE • Life style pattern – India’s middle class population changing • “Saving” to “Spending” pattern • Marked increase of new entrants – all verticals • Modern Retail Formats: Malls, Department Stores, Discounters, Cash & Carry • Higher Disposable Income • Employers offering – lucrative compensation & packages • Increase in young population – increase in urbanization IIPM AHMEDABAD 09-11 12
  13. 13. KEY PLAYERS IN INDIA • Pantaloons Retail India • Shopper’s Stop ltd • RPG Enterprises • Landmark Group • Madura Garments – part of Aditya Birla Group • Globus • Provogue Ltd. • Bata India Ltd • Archies Ltd IIPM AHMEDABAD 09-11 13
  14. 14. SOME OF MNCS IN INDIA • United Colors of Benetton - Italy • Arrow – USA • Levis - USA • Lee - USA • Pepe Jeans - London • Subway - USA • Wrangler - USA • Samsonite – USA IIPM AHMEDABAD 09-11 14
  15. 15. KEY OPPORTUNITIES • Wedding Malls • Khaadi Plaza – 7000 outlets are to be launched • Initiative Gujarat – Village Malls (512 launching & 508 awaiting) • Immense potential in Rural Market – food, grocery , etc. • Untapped Market – Reliance Retail, Aditya Birla • RFID Technology – for better CRM & SUPPLY CHAIN • Online Retailing – click to buy IIPM AHMEDABAD 09-11 15
  16. 16. REVENUES & SHARES OF VERTICALS Food & Clothing Consumer Jewelry & Home Beauty Books & Foot ware beverages & textile Durable Watch Décor Products Music 3,268 & 231,951 & 29,024 & 15,171 & 13,390 & 9,463 & 6,854 & 2,610 & 1.05% 74.41% 9.31% 4.87% 4.30% 3.04% 2.20% 0.84% ALL IN USD & MILLIONS – Source: ibef IIPM AHMEDABAD 09-11 16
  17. 17. SWOT ANALYSIS STRENGTHS WEAKNESS • Young Population • Policy related Issues • Rapidly growing sector • Less Educated people • High Disposable income • Underdeveloped Supply chain • Low labour cost • Lack of basic utilities • Microfinance • Lack of Power in Rural Areas OPPORTUNITIES THREATS • Untapped Rural Market • Poor Managed Inventory • Collaboration with MNCs • Unorganized Retail – high % • Retail Franchising • Uneducated People – slow change • E-Retailing • Not much developed shopping culture • RFID Technology • More of window shopping IIPM AHMEDABAD 09-11 17
  18. 18. INITIATIVES BY CORPORATES 1. Arvind Mills – focus Rural Retail Focus on direct selling Shop –in-shop stores double to 1200 by April Pack Model – smaller packing – multiple choices Product Innovation Group to re-look – product innovation, rural marketing No Forex Risk Attached B2C Model – 50-60% y-o-y higher than denim IIPM AHMEDABAD 09-11 18
  19. 19. RETAILING @ BOP Population in Billions TIER 1 75-100 1500-1750 TIER 2 - 3 More than 4 TIER 4 billion constitute 4000 the BOP & live less than $ 2 per day TIER 5 IIPM AHMEDABAD 09-11 19
  20. 20. Urban Areas have become a magnet of poor Cash – poor & low level of income, BOP consumer has to be accessed differently Bolivian Financial Services: illiterate people can access it 24*7 HUL – CASIS SHAKTI BAHIA ITC ICICI E-CHOUPAL CEMEX SELF – HELP IIPM AHMEDABAD 09-11 20
  21. 21. HUL – MICRO RETAILING • 1999 start up – 6 new growth opportunities • Confectionaries & sweets – candy fastest growing product @ BOP • Ayush – Consumer Health Care • Sangam – E-tailing program for daily ordering & delivering. • Addressing needs of top – end consumers • Water facility • Project Shakti – direct – to – consumer initiative IIPM AHMEDABAD 09-11 21
  22. 22. PROJECT SHAKTI - HUL • Women’s Self Help Groups – Entrepreneur Development training • Educating consumers on health & hygiene • 4 goals of Project Shakti: i. Plan to increase reach – Rural Market ii. Attempt to increase awareness iii. change attitudes iv. Catalyze rural affluence & drive growth • Andhra Pradesh – 70% involved in SHG • Total – 1 million nationwide • Investment > Rs. 20,000> 10% margin • Shakti Vani programme – trained communicators, driven messages on sanitation, good hygiene practices & women empowerment • Year end 2008 – 45,000 entrepreneurs covering 1,00,000 villages across 15 states reaching 3 million homes IIPM AHMEDABAD 09-11 22
  23. 23. ITC E-CHOUPAL – PROFITABLE RURAL TRANSFORMATION • States covered – 10 • Villages covered – 40,000 • # of e-Choupal – 6,500 • Farmers e-empowered – 4 million • Expanding spectrum of commodities – wheat, pulses, soya, maize, spices, coffee, aqua – products • Farmers – rise in income level • Compare price @ Chicago Trading Board too. • Choupal Saagar – 24 hubs, 3 states, grow by 100 by 2010 IIPM AHMEDABAD 09-11 23
  24. 24. E-RETAILING • E-commerce classification: a. B2C – online selling by business unit to an individual consumer b. B2B – Online selling by business to business c. C2C – Online selling by consumer to another consumer  Today:  Customer is the king – 24*7 service through email, chat & toll free  Supply chain  E.g – ITC e-choupal  Better information  Convenience  Targeted & Mass Customization  Global Reach @ low cost  Value Added Service with best Customer service “Shopping Anywhere, Anytime” IIPM AHMEDABAD 09-11 24
  25. 25. IIPM AHMEDABAD 09-11 25

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