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organised and unorganised retailing

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  1. 1. Presenting on: RETAIL SECTOR – CRISIL ANALYSIS Under the mentorship of: Prof. iftiquar Mistry Submitted by: Shweta kittur Sneha Shrivastava Nikhil Revdekar Shrund kalse Pranay Ragabhagt
  2. 2. • Retailing: The activities involved in the selling of goods to ultimate consumers for personal or household consumption. • Unorganized Retailing: Unorganized retailing refers to small retailers selling goods under the traditional formats like counter stores, kirana shops, street markets, kiosks and vendors, where the ownership and management rest with one person only. • Organized Retailing: Organized retail is typically chain stores, all owned or franchised by a central entity.
  3. 3. • Retail Distribution Channel:
  4. 4. • Levels of retailing:
  5. 5. • Statistics on overall retail market share: Sales 1% 3% Food and grocery Apparel 4% 4% Consumer Durables Mobile and I.T Home Décor and furnishing Beauty, personal and health care Pharmacy 5% 6% 12% 70% jewellery, watches, eyecare and others footwear Books and Music
  6. 6. • Value retailing and types of value Retailing: Value retailing is a concept targeted mainly towards the masses comprising largely of middle-income households. • Types of value Retailing: - Convince Stores - Supermarket stores - Hypermarkets • Life style retailing: - Department Stores - Specialty Stores
  7. 7. • Other Formats: - Cash and carry - Luxury Retailing - airport retailing - Online retailing - Television home shopping - vending machine retailing - Kiosks
  8. 8. • Rising Income – Reason for retail growth: - Rising income levels to drive consumption -Desire for better standard of living to drive non-food consumption growth • Demographic changes: -Increasing role of working women in consumer spends - Employed youth to influence consumer spending -Nuclearisation of families to drive consumption -Growing urban population - Key to future spending -Shift in the preference for branded products
  9. 9. Players profile: • Footwear Retailing: -Bata - Liberty - Khadim - Cotton County • Home Decor and furniture retailing: - Bombay Dyeing - Style Spa - Welspun Welhome • Pharmacies: - apollo - Medplus - Religare wellness
  10. 10. • Consumer Durables: - Croma - e-Zone - NEXT • Retail Stores: - Pantaloon retails - Shopper Stop - Reliance retail
  11. 11. • FDI in multi brand retail: Positive only in the long term: CRISIL Research believes that these amendments to the FDI policy are positive for the organized retail sector in the long term. However, uncertainty in both, the global and domestic economies, will delay the entry of foreign players into the Indian retail sector in the short term. • Amendments to the policy are: -Mandatory investment in back-end infrastructure only for first tranche of investment -Definition of MSMEs amended to include companies with investment up to $2 million -Foreign retailers can now operate in cities with population of less than 1 million
  12. 12. • Bulletins:  Clothing and textiles, consumer durables constitute large share of organized retail market  Private labels in FCTVs can help improve net margins  Private labels to help boost margins in bed sheets and shirts • Hypermarkets - A better opportunity as compared to department stores - Significant growth in organized retail sector in last few years - Hypermarkets and department stores constitute significant share of total organized retail market in India - Hypermarket format v/s department store format - Department stores popular until entry of hypermarkets
  13. 13. - ‘Value for money' proposition works well for growth of hypermarkets - Department stores score over hypermarkets in terms of profitability - Higher share of apparels in department stores ensures higher gross margins - Hypermarket format more lucrative, despite low returns - Offering lifestyle proposition can prove to be costly for department stores
  14. 14. Hypermarket retailer format generate high returns than C&C format • A hypermarket caters to retail buyers while a C&C caters to wholesale mode • C & C- High-volume, low-margin business • Higher pressure on C & C store to generate higher revenue • Hypermarket retailers generate higher ROCE
  15. 15. Gross margins across business models Capital cost in base year: Rs per sq ft
  16. 16. Jewellery Retailing • Dominated by family jewellers • Tanishq, Gitanjali and Reliance ventured into the organised jewellery retail space • As of 2009-10, market size is estimated at Rs 973 billion • Organised retailing penetration (ORP) in jewellery is estimated at 10 per cent • Gold jewellery constitutes the largest component of retailer revenues • Product mix and lease rentals key determinants of returns
  17. 17. Footwear • Overall market is valued at Rs 500 billion, with organized retail penetration (ORP) estimated at 15 per cent • Entry of footwear exporters in the domestic market has supported the organized footwear retail growth • Suppliers to the leather footwear industry are highly fragmented • Most organized footwear retailers are backward integrated till the manufacturing stage
  18. 18. Key success factors in footwear retailing & Value chain - Leather footwear
  19. 19. Food & Beverage Joint • Returns generated by Quick Service Restaurants (QSRs) are higher than that generated by coffee chains • Higher transactions by QSRs help them earn better returns vis-a-vis coffee chains • Comparison of QSRs and coffee chains below
  20. 20. Beauty & Wellness (B&W) Services • Growing awareness about health and beauty, supported by rising income levels, has propelled the growth of gym, salon and spa chains over the last few years in India
  21. 21. Share of chains to corresponding industry revenues & Growth in gym, salon and spa chains
  22. 22. Online Retail • The online retail market in India will triple in size by 2014-15, from Rs 32 billion at present. • Online retail in India will be dominated by product categories that are brand driven, have a low-ticket size and are easily transportable such as electronics, followed by lifestyle and books
  23. 23. Non store retailing formats
  24. 24. Food &Grocery • While food and grocery (F&G) accounts for twothirds of overall retail, the share of organised retail is the lowest among all retail verticals, signifying underlying opportunity. • The food and grocery (F&G) vertical, a Rs 16 trillion industry, comprises more than twothirds of the overall Indian retail sector. • the organised retail market in F&G is only Rs 390 billion, and the organised retail penetration (ORP) of this vertical is the lowest among all retail sector verticals at 2.4 per cent