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1 industry overview retail primer
- 2. FFLLIIPPKKAARRTT RREETTAAIILL PPRRIIMMEERR IINNDDUUSSTTRRYY && OORRGGAANNIIZZAATTIIOONN OOVVEERRVVIIEEWW
- 3. BBYY TTHHEE EENNDDOOFF TTHHIISS SSEESSSSIIOONN,, YYOOUU WWIILLLL BBEE AABBLLEE • Explain what is Retail TTOO:: • Explain the difference between Organized and Unorganized Retail • Explain the benefits and challenges of e-retail • Explain the causes for growth of retail in India • Explain the future prospects of retail in India • Explain some of the common retail terminologies used
- 4. WWHHAATT IISS RREETTAAIILL?? Retail is the sale of goods and services from individuals or businesses to an end-user
- 5. TTYYPPIICCAALL RREETTAAIILLIINNGG MMAARRKKEETTIINNGGCCHHAANNNNEELLSS A B C MANUFACTURER WHOLESALER RETAILER CONSUMER MANUFACTURER MANUFACTURER RETAILER CONSUMER CONSUMER
- 6. RREETTAAIILL OORRGGAANNIISSEEDD •Licensed Retailers • Have processes defined and set • Efficient use of technology • Sell brands and private labels UUNNOORRGGAANNIISSEEDD • Traditional formats of low-cost retailing • No standardized processes • Absence / Limited use of technology • Sells non-brands and/or loose items
- 7. EEVVOOLLUUTTIIOONN OOFF RREETTAAIILL Barter Currency Hawkers Mom & Pop Stores Organised Retail e-retail
- 8. RREETTAAIILL SSTTOORREE FFOORRMMAATT STORE BASED RETAIL FORMAT NON-STORE BASED ‣ SUPER MARKETS ‣ HYPER MARKETS ‣DEPARTMENT STORES ‣SPECIALITY STORES ‣CONVENIENCE STORES ‣CATEGORY KILLERS ‣ ONLINE STORES ‣ TELESHOPPING ‣ DIRECT MARKETING ‣CATALOGUE MERCHANDISING
- 9. RREETTAAIILL BBUUSSIINNEESSSS FFOORRMMAATTSS BRICK & MORTAR These are retail stores which retail only in the Brick & Mortar format E.g., Big Bazaar, Food World BRICK & CLICK PURE CLICK A B C These are retail stores which exist and retail both in store-based and non-store based formats E.g., Landmark These are retail stores which retail only online E.g., Flipkart
- 10. RREETTAAIILL BBUUSSIINNEESSSS FFOORRMMAATT B2B E.g., E.g., E.g., E.g., ‣ globalsources.com ‣ Metro Cash ‘n’ Carry B2C C2C C2B ‣ flipkart.com ‣ Shopper’s Stop ‣ Olx ‣ Quikr ‣ Alibaba ‣ Priceline Company ‣ JustDial
- 11. IINNTTEERRNNAATTIIOONNAALL RREETTAAIILL Allthe activities involved in selling products and services from individuals or businesses to final international consumers for their personal consumption
- 12. IINNTTEERRNNAATTIIOONNAALL RREETTAAIILL IINNDDUUSSTTRRYY The Global retail industry was US$ 14.9 trillion ( INR14,90,000 Crores ) in 2010 and the market is forecast to reach an estimated US$20,002 billion ( for reference 1 billion US$ = INR100 Crores ) in 2017 with a CAGR of 3.9% over the next six years (2012–2017). India rank’s 5th amongst the top 10 most attractive countries for Retail investment & growth after Brazil, Chile, China & Uruguay. USA, Japan, Germany & France dominated retail sales in the year 2012.
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- 15. IINNDDIIAA’’SS RREETTAAIILL FFUUNNDDAAMMEENNTTAALLSS India remains a high potential market with accelerated retail growth of 15-20 % expected over the next five years. India's retail sector is worth US$ 350 billion ( for reference 1 billion US$ = INR100 Crores ) and has a low organised retail penetration (ORP) of 5 per cent to 8 per cent and is now growing at a compound annual growth rate (CAGR) of 15% to 20%. The e-commerce revenues in India are expected to increase more than five times, from US$ 1.6 billion in 2012 to US$ 8.8 billion in 2016. The Indian digital consumer industry, e-tailing is set to become a INR Rs. 53,000 Crore (US$ 9.76 billion) market by 2015 from the current INR Rs. 3,600 Crore (US$ 662.98 million).
- 16. TTOOPP IINNDDIIAANN RREETTAAIILLPPLLAAYYEERRSS ‣ Central, aLL, Brand Factory, Blue Sky, Top 10, Fashion Station, Big Bazaar, Lee Cooper (JV) ‣ Big Bazaar, Shoe Factory, Navras, Electronics Bazaar, Furniture Bazaar, KB'S FAIR PRICE, Food Rite ‣ eZone, Electronic Bazaar, Koryo , Sensei, STAPLES (JV) ‣ Home Town ‣ Collection i, Furniture Bazaar, Home Bazaar ‣ Depot ‣ Bowling Co., F123, TGIF ‣ Star & Sitara, Tulsi ‣ Gen M, M Bazaar, M-Port, ConvergeM, Future Axiom, T 24, One Mobile (in alliance with TATA Teleservices) ‣ Koryo, Sensei, IPAQ ‣ E Care, H Care, Design & Service ‣ Central Mall (Bangalore, Hyderabad, Pune, Mumbai,Kochi, Vadodara, Gurgaon, Indore, Ahmedabad, Thane, Surat) ‣ Insurance: ULIP, Pension, Endowment, etc. ‣ Shopper’s Stop, Crossword, Home Stop, Brio (in agreement with Cafe Coffee Day), Desi Cafe, Hypercity, M.A.C., Arcelia, Mother Care, Nuance Group, Hypercity-Argos, Time Zone ‣ InOrbit ‣ Hospitality: Hotels and Resorts ‣ Real Estate: Residential, Commercial, SEZ, Cutomised Projects ‣ Chemicals ‣ Consumer Products ‣ Energy ‣ Engineering ‣ Information Systems & Communications ‣ Services ‣ Steel ‣ Core Sciences ‣ Tyres ‣ Power Transmission & Distribution ‣ Technology ‣ ITES ‣ Speciality ‣ Others
- 17. RREETTAAIILL GGRROOWWTTHH DDRRIIVVEERRSSOOFF IINNDDIIAA Changes in Demographics Rising Income levels Changes in Consumer needs, attitudes & behavior Increasing awareness & exposure of consumers to international trends Increased Credit friendliness RETAIL SHOPPERS
- 18. EE--TTAAIILLIINNGG // EE--RREETTAAIILL All the activities involved in selling products and services over the internet from individuals or businesses to final consumers, both local and/or international for their personal or commercial consumption.
- 19. EE--CCOOMMMMEERRCCEE Electronic commerce,commonly known as e-commerce, is a type of industry where buying and selling of product or service is conducted over electronic systems such as the Internet and other computer networks. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices, social media, and telephones as well.
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- 23. EE--TTAAIILLIINNGG && IINNDDIIAA’’SSFFUUTTUURREE Source: e-retail Congress Report 2013
- 24. RREETTAAIILL JJAARRGGOONNSS PRIVATELABEL DEAD STOCK / INVENTORY SEASONAL MERCHANDISE ISBN - INTERNATIONAL STANDARD BOOK NUMBER MERCHANDISE INVENTORY
- 25. RREETTAAIILL JJAARRGGOONNSS SALESORDER PURCHASE ORDER INVOICE ENTERPRISE RESOURCE PLANNING - ERP GOODS RECEIVED NOTIFICATION
Editor's Notes
- #5 Selling of Goods in smaller units. Selling it to the end consumer.
- #6 Both Apple and Dell use all these strategies to reach their end consumers.
- #12 Selling of Goods in smaller units. Selling it to the end consumer.
- #13 Brazil : 5th largest country in the world by geography & population. Language Potugese, Capital Brasilia. Reasons for growth of Retail in Brazil – The country is highly urban, about 88% of the country by 2015 will be urban; 67% of the population is economically active (the GDP is increasing annually by 4.2%, 40% of the country is aged between 20 to 44. Brazil, Chile & Uruguay are South American Countries. Chile & Uruguay speak Spanish.
- #15 Selling of Goods in smaller units. Selling it to the end consumer.
- #16 he year-over-year growth rate of an investment over a specified period of time.The compound annual growth rate is calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered.This can be written as follows:Investopedia explains 'Compound Annual Growth Rate - CAGR' CAGR isn't the actual return in reality. It's an imaginary number that describes the rate at which an investment would have grown if it grew at a steady rate. You can think of CAGR as a way to smooth out the returns.Don't worry if this concept is still fuzzy to you - CAGR is one of those terms best defined by example. Suppose you invested $10,000 in a portfolio on Jan 1, 2005. Let's say by Jan 1, 2006, your portfolio had grown to $13,000, then $14,000 by 2007, and finally ended up at $19,500 by 2008.Your CAGR would be the ratio of your ending value to beginning value ($19,500 / $10,000 = 1.95) raised to the power of 1/3 (since 1/# of years = 1/3), then subtracting 1 from the resulting number:1.95 raised to 1/3 power = 1.2493. (This could be written as 1.95^0.3333).1.2493 - 1 = 0.2493Another way of writing 0.2493 is 24.93%.
- #17 1. Future Group, 2. K. Raheja Group, 3.Tata, 4. RPG Group, followed by Landmark Group, Piramal Group, Subhiksha, Bharti-Walmart, Reliance & AV Birla Group in that order to complete the list of top ten retailers in India.
- #18 Changes in demographics: India has the lowest median age of 24 as compared to developed countries like USA, UK, Japan etc. The composition of the Indian population is shifting towards the age group of 20-49 i.e. the working population with purchasing power. Approximately 60% of the Indian population is below 30 years of age. Thus, India has the largest 'young' population in terms of sheer size and this young segment is the major driver of consumption as they have the ability (disposable income) and willingness to spend. Rising income levels: INDIA IS THE SECOND FASTEST GROWING ECONOMY IN THE WORLD in the world. A larger number of households are getting added to the consuming class with growth in income levels. Increasing instances of double incomes in most families coupled with the rise in spending power is further fuelling the growth of retail sector. Changes in consumer needs, attitudes and behaviour: The growth of modern retail is linked to consumer needs, attitudes and behaviour. Rising income levels, education and global exposure have contributed to the evolution of the Indian middle class. As a result, purchasing and shopping habits have been inculcated and are increasing day by day. Historically, Indians have not been the ones to splurge on luxury items. Today, people are willing to try new things and look different, which has increased spending on health and beauty products apart from apparels, food and grocery items. Increased credit friendliness: There has been a radical change in the Indian consumers' mindset regarding credit. With the easy availability of credit and declining interest rates, personal credit has witnessed growth. The boom in financing has resulted in an increase in spends on housing and consumer durables such as two-wheelers and cars. The use of plastic money (credit and debit cards) has increased significantly in the last 3-4 years. In fact the ease of payments (ability to spend without cash) due to the use of credit and debit cards, has also led to an increase in total spending on shopping and eating out. The total number of debit and credit cards issued in India in FY06 was estimated to be around 47 m and 18 m respectively. Indians withdrew nearly US$ 50 bn using credit cards from ATMs in 2005. This includes US$ 26 bn through Visa credit cards alone. Visa saw a 36% growth in the number of cards issued, making India the third biggest card market for Visa, after Japan and Korea (Source: IBEF). With the acceptance of and the increase in the number of electronic data converter machines installed in retailing outlets, credit and debit cards will provide further fillip to organised retail. Increasing awareness of Indian consumers: Over the years, as a result of the increasing literacy in the country, exposure to the west, satellite television, foreign magazines and newspapers, there is a significant increase in consumer awareness among the Indians. Today more and more consumers are selective with regards to the quality of the products/services. Growth in Indian retail has been driven by the country's economic fundamentals over the past few years. Increasing number of nuclear families, easy financing options, increase in the population of working women and emerging opportunities in the service sector during the past few years have been the key growth drivers of the ORGANISED RETAIL SECTOR in India. Consumers are now showing a growing preference for organised retail, resulting in increased penetration. The retailing sector is at an inflexion point where the growth of organised retailing and growth in consumption by the population is expected to take a higher growth trajectory. Going forward, we believe that accretion to income levels of the rising Indian middle class (represented by the financially independent young population) and the consequent rise in disposable incomes will fuel growth of the retailing sector.
- #19 Selling of Goods in smaller units. Selling it to the end consumer.
- #21 Global e-commerce has grown 13 percent annually over the past five years. Retail expansion is increasingly occurring through online channels as a way to tap into growth markets, build brands, and learn about consumers while investing less capital than traditional formats.; E.g., American luxury retailer Neiman Marcus acquired partial ownership in a Chinese fashion website to test China's market, learn about Chinese consumers' likes and dislikes, and capitalize on the country's increasing demand for luxury goods. Neiman Marcus got all the information it needed without entering into expensive real estate contracts or trying to navigate the complexity of tier 2 and tier 3 cities. French luxury retailer Louis Vuitton Moet Hennessy (LVMH) used a similar strategy, acquiring Sack's, Brazil's leading online beauty retailer, to develop local recognition of its Sephora cosmetics line. E-commerce is playing a vital role in multichannel retail strategies, which are new to many developing markets. In late 2011, U.K.-based Argos partnered with Chinese electronics manufacturer Haier to create a new multichannel operation in mainland China. Argos plans to open a showroom in Shanghai and take advantage of Haier's existing franchise network of 6,000 stores to serve as delivery points for online orders. Pursuing international online expansion often means doing battle with domestic e-commerce players that already control a large portion of a market. Chilean retailers Falabella and Cencosud combined own nearly 40 percent of their home country's online retail market, and Brazilian retailers B2W and Magazine Luiza own 30 percent of the Brazil market—similar trends are occurring across Asia, Eastern Europe, and the Middle East. Therefore, competing against these domestic players requires understanding online consumers within each market and tailoring e-commerce operations accordingly.
- #22 A country's prospects for online retail success are closely related to how many people use the Internet and how many are comfortable purchasing products online. The matrix shown in figure 3 compares these two factors for all 30 countries ranked in the 2012 GRDI. A.T. Kerney Analysts identified four types of online markets: Infrastructure impediment. These markets lack the technological and logistical infrastructure for high-volume e-commerce. For example, most consumers in India, ranked 5th in the GRDI but unranked in the E-Commerce Index, lack the technology to connect to the Internet, and those who do have the technology still avoid e-commerce because of a poor infrastructure that prevents reliable delivery and returns. Succeeding in these markets may require collect-on-delivery (COD) payments to overcome constraints in the financial infrastructure and better communications with customers to help them understand delivery timeframes. FLIPKART PRACTICES THIS. Ask what measures should we as advertisers and facilitators of e-commerce do to penetrate and help foster e-commerce in Tier II and Tier III cities. Ask what measures we our decision making machinery should adopt to overcome hurdle. E-commerce inequality. Markets such as Mexico and Sri Lanka have low-to-moderate Internet penetration overall but have a wealthy class that uses the Internet extensively and regularly buys online. Adjusting the product mix, prices, and advertising will appeal to these high-income Web surfers. Having the flexibility to adjust products, prices, and ads for online buyers will become more important as low-income users become more accustomed to buying online. Ready and willing. Five of the 10 countries ranked in our E-Commerce Index fall into the ready and willing category of markets because they have the full e-commerce package—the infrastructure to support high-volume e-commerce and users who are comfortable buying online. In these markets, it is important to thoroughly understand why customers buy online and to continually meet their expectations to ensure repeat purchases. Chile's Cencosud finds out what its online customers like and dislike by asking them to participate in an online post-purchase survey; participants are registered in a raffle for free gift cards after comments are posted. Hesitant shoppers. Some markets have the technological infrastructure to support e-commerce, but poor in-country dynamics—such as logistics, digital laws, or cultural biases— that make Internet users wary of purchasing online. These markets require a combination of techniques to instill confidence in e-commerce, including in-store pickup, rebates for credit card transactions, online product promotions and value pricing, and 24-7 call centers. For example, Turkey's hepsiburada.com has overcome Turks' hesitancy to pay online by offering a pay-at-your-door option that allows customers to receive and inspect the product before paying for it with cash or card.
- #24 According to the e-retail congress report 2013, Indian e-retail is growing with a 40% annual rate is currently on the verge of crossing the Rs.3600 crore mark. The report predicts that it will hit Rs. 7200 crores in 2015. The report also shows that more Indian retailers are moving towards the Omni-channel integration approach where customers can get an integrated experience across desktop, mobile, offline shops etc. Regular brands could have their own stores on marketplaces like Snapdeal, eBay and Infibeam and thus have to worry less about the breaking into the e-commerce sector and concentrate towards that integrated approach. As you can see the market has grown tremendously due to successful adoption of e-commerce as a buying option by city folks. Currently, e-commerce is growing outwards from city areas to tier 2 and tier 3 cities and small towns. The report says that 50% people use Direct debit while 20% people use Cash on Delivery. A graph about the category penetration of goods sold via e-commerce shows that apparel is one of the most popular category followed by book & music, accessories and so on. That may explain the successful rise of such brands as Zovi, Inkfruit, Shersingh, Myntra etc. The report says that around 55% use mobiles in the country, while 45% use the desktop to browse the web. Thus, it is important for e-commerce players to be mobile ready because the growth in mobile internet users is really significant and has actually taken over the desktop. The research suggests that Indian buyers are comfortable to buy something or things in the range of Rs. 500 – Rs. 2000. This will prove beneficial for fast moving goods which can cost around that point like clothes, accessories, books, music cds etc. The report also showed an estimation of the daily visits that major Indian e-commerce websites like Snapdeal, Flipkart, Myntra, Jabong etc get. Snapdeal leads the pack with the highest daily visits, followed by Flipkart and Jabong. All the top 3 services are multi-category websites while others like Myntra and Fashion&You are geared towards clothes and fashion.