The document summarizes the Indian retail scenario, including the growth of modern retail formats. Key points include: - India has a large and growing middle class with rising disposable incomes, fueling retail growth of 8-10% annually. - Modern retail formats like supermarkets and department stores are gaining popularity among youth but make up only 3% of the market currently. - Allowing foreign direct investment could further boost the economy and retail sector, but challenges remain around regulations, infrastructure, and a skilled workforce. - With proper policies to develop supply chains and ease regulations, the retail market is expected to reach $25 billion by 2010, benefiting consumers and the economy.

1. Indian Retail scenario

2. * India‘s increasingly affluent middle class-300 million * Increasing proportion-Higher disposable income 83000 millionaires,India to be the fastest wealth creator by 2010. * The new age Indian youth-modern,well informed * Indian value system-price sensitive * Market Growth 8-10% annual growth with 30%+ growth rate for modern format retail * Strong Economy: Fourth Largest on purchasing parity basis * Market opportunities: Growing consumers aspirations together with very low penetration of modern format retailing. * Infrastructure-Large amount of quality retail space being added

3. Evolution of Indian Retail Historic/Rural Reach-Weekly Markets,Village fairs,melas- Source of entertainment Traditional/pervasive reach-Convenience store,Mom and Pop/kiranas-Neighborhood stores/convenience. Government supported-PDS Outlets,Khadi stores,cooperatives-Availability/Low costs/Distribution Modern Formats/International-Exclusive Brand Outlets/Hyper/Super Market/Departmental Stores/Shopping Malls-Shopping Experience/Efficiency

4. Retailing Formats Hyper Marts Large supermarkets,typically (3500-5000 Sft) Mini Supermarkets,typically (1000-2000 Sft ) Convenience Store,typically (750-1000 sft ) Discount/shopping list grocer Traditional retailers trying to reinvent by introducing self-service formats as well as value added services

5. Indian Retailers Hypermarket Department Stores Entertainment Big Bazaar Life Style Fame Giant Pantaloons Adlabs Shoprite Pyramids Fun Republic Star Bazaar Shopper’s stop Inox Aditya B Group Trent PVR Hyper city Cinemax

6. Consumer Expenditure in Organized Retail

7. Retailers-Always healthier than Ever Company Market Cap(Rs mn) P/E CAGR Returns 3 Year or On Listing Pantaloons 3,561 60.2 89% Shopper’s Stop 1,727 63.7 29% Trent 991 40 54%

8. Global Retail Scenario Global Retail Industry is of size of USD 8 Trillion Over 50 of the Fortune 500 companies are retailers Fortune #1 “Wal-Mart” is a retailer 25 of the asian top 200 companies are retailers

9. Indian Retail Market * Over 12 Million Outlets in India *Organized Retail 3% *Set to Grow to 8-10% by 2010 *Organized Retail expected to be around Rs.110,000 Cr (USD 25 b) by 2010

10. FDI In Indian Retailing *Franchise-Nike,Pizza Hut, Tommy Hilfiger,Marks and spencer,Mango *Manufacturing-Bata India *Distribution-Swarovski,Hugo Boss * Wholesale Trading-Metro cash & carry *Food outlets-McDonald’s KFC,Pizza Hut,Dominos

11. Benefits of FDI *Greater per capita income *Increasing Tax paying Population *Reduced Tax Evasion *Greater Sourcing From India *Greater Consumer Spending due to economic boom

12. The Changing Indian Consumer The Urban Consumer *Getting exposed to international lifestyle *Inclined to acquiring asset *More discerning and demanding than ever No Longer need-based shopping *Shopping is a family experience Changing Mindset *Increasing tendency to spend *Post liberalization children coming of age *100 Mn17-21 year olds tend to spend freely Greater level of Education

13. Challenges of Retailing in India *Automatic approval is not allowed for foreign investment in India * Regulations restricting real estate purchases,and cumbersome local laws * Taxation,which favors small retail business * Absence of developed supply chain and IT management * Lack of trained workforce * Low skill level for retailing management

14. Recommendations Grant full industry status to retail Permit FDI in retail in phases Invest in supply chain infrastructure Ease distribution Ensure single window clearance foe retail chains Organize market for real estate Ensure proper rent laws Enforce zoning laws and city development plan Increase land supply Ensure flexibility of labor laws

15. Implications for India *Be ready *Be realistic *Be resilient