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- 2. PAST, PRESENT &FUTURE EMERGING RETAIL FORMATS IN INDIA
- 3. • Introduction • Evolutionof Indian retail • Emerging Trends • Research • Future Retail • Shoppers Stop • FDI in Retail- Present & Future Scope • Conclusion FLOW OF PRESENTATION
- 4. “Retailing includes allthe activities involved in selling goods or services directly to final consumers for personal, non-business use” - Philip Kotler
- 5. • Indian retailindustry is worth 500bn $ • Indian retail sector accounts for 22% of India’s GDP • Contributes 8% to total employment Source: Report named ‘Retail Sector in India’ by Research And Markets INTRODUCTION
- 6. • Organized :Trade activities undertaken by licensed retailers • Current retail penetration: 8% • Expected coverage by 2020: 20% • Expanding at 20% per annum • Rapid urbanization with increasing purchasing power, easy credit availability, policy support by government, increasing investments. • Unorganized: Outlets run locally by the owner or a care taker of the shop- unlicensed. • Current retail penetration: 92% • Low technical and accounting skills required Source: Technopak Aranca Research- 2012 TYPES OF RETAIL
- 8. • Manufacturers opened their ownoutlets • Pure play retailers realised the potential of the market • Most of them in apparel segment • Entry in food and general merchandise category • Repositioning by existing players Initiation Conceptualisation Consolidation Expansion Pre 1990s 1990–05 2005–10 2010 onward • FDI in single-brand retail up to 100 per cent from 51 per cent • Approval of FDI limit in multi-brand retail up to 51 per cent • Rise in private label brands by retail players • Increasing investments in retail infrastructure EVOLUTION OF INDIAN RETAIL Source: Technopak Advisors Pvt Ltd, Aranca Research
- 10. • India has3rd highest number of internet users • Growing @40% per year • Present contribution of online retail: 0.5% EMERGENCE OF ONLINE RETAIL Source: Report by COMSCORE for ASSOCHAM- 2013
- 11. • Young populationaided by easier access to credit and payment options; increasing internet penetration and speed, 24-hour accessibility, convenient and secured transactions • Computer peripherals, camera and mobiles, and lifestyle segments account for a majority of total purchases • Projected to increase from 0.6bn US$ in 2011 to 70bn US$ in 2020 ONLINE RETAIL Source: MasterCard worldwide insights- 2011
- 12. • SPECIALTY STORES Atypical specialty store gives attention to a particular category and provides high level of service to the customers For example if a customer visits a Reebok or Gap store then they find just Reebok and Gap products in the respective stores. • DEPARTMENT STORES A retailer of such store carries variety of categories and has broad assortment at average price & offer considerable customer service For example: Food World in Bangalore EMERGING RETAIL FORMATS
- 13. • DISCOUNT STORES Offersextensive assortment of merchandise at affordable and cut-rate prices Normally retailers sell less fashion-oriented brands The service is inadequate For example: The Loot • CONVENIENCE STORES Is essentially found in residential areas Provide limited amount of merchandise at more than average prices with a speedy checkout Store is ideal for emergency and immediate purchases For Example: Reliance Fresh
- 14. • HYPERMARKETS: Approx21% of retail space by 2014 • Provides variety and huge volumes of exclusive merchandise at low margins Operating cost is comparatively less than other retail formats For Example: Dmart , Big Bazaar, Trent, Landmark, Star Bazaar • SUPERMARKETS a self-service store consisting mainly of grocery and limited products on non food items may adopt a Hi-Lo or an EDLP strategy for pricing supermarkets can be anywhere between 20,000-40,000 square feet For Example: SPAR™ supermarket
- 15. • MALLS Has arange of retail shops at a single outlet Endow with products, food and entertainment under a roof For Example: Inorbit Mall, Ambience Mall. • E-TAILERS Customer can shop and order through internet and the merchandise are dropped at the customer's doorstep Format is ideal for customers who do not want to travel to retail stores and are interested in home shopping For Example: Amazon and Ebay
- 16. FUTURE GROUP: TheWalmart of India Future Retail Ltd (FY12) • Revenue: USD2.7 billion • Operational retail space:16.3 msf • Over 1000 stores in 121 cities • Employees: 36,000
- 17. • It’s aflagship company of Future Group • Multiple retail formats: hypermarkets & supermarkets • A network of more than 315 stores encompassing an area of over 11 million square feet. • Under Future Fashion, the company owns a portfolio of 24 leading brands and covers more than 121 cities • Revenues expanded at a robust CAGR of 22.7 per cent during FY08-12 Contd…
- 18. • Shoppers StopLtd., a pioneer in modern retailing in India, has been promoted by K Raheja Corp. Group, one of the leading groups in the business of real estate development and hotels in the country. • Shoppers Stop and its associate companies are involved in retailing through department stores, specialty stores, entertainment zones and large hypermarkets. • The company owns 172 stores in 25 cities with 4.81 million sq ft space across eight store formats • Over 2.5 million customers are a part of the First Citizen Loyalty Programme • Centralized buying for all products except cosmetics and perfumes to avoid sales tax SHOPPERS STOP: A case at hand
- 20. INDIAN RETAIL TOBENEFIT FROM FDI In 1991, India shifted to New Economic Policy and allowed for international trade and investment, deregulation, initiation of privatization, etc FDI upto 51% allowed under automatic route in selected sectors. India in 1997 allowed foreign direct investment (FDI) in cash and carry wholesale. FDI upto 51% allowed in single brand retail with prior govt. Approval. In 2008-09, FDI stood at $27.3 billion. In 2012-13, FDI dropped to $22.4 billion
- 21. FDI POLICY DETAILSON INDIAN RETAIL SECTOR • Until 2011, Indian central govt. denied FDI in multi-brand Indian retail • On 24 November 2011, India allowed foreign groups to • own up to 51 % in multi-brand retailers • own 100 % for single brand retailers, from the previous cap of 51% • More recently, there have been relaxations in some norms so that a company can invest in cities having population of less than 10 lakhs • The cap for 30 % sourcing regulation from local market has been increased from 1mn to 2mn USD
- 22. • Joint Ventures •Franchising • Cash & carry operations • Non-store formats • Sourcing of supplies from small scale sector FORMS OF FDI IN INDIAN RETAIL
- 23. • India isthe fifth largest preferred retail destination globally • The sector is experiencing exponential growth, with retail development taking place not just in major cities and metros, but also in Tier-II and Tier-III cities Large number of retail outlets • FMCG players are focusing on rural market as it constitutes over 33 per cent of FMCG consumer base in India • With increasing investment in infrastructure, retailers will be able to increase their access to high-growth potential rural market Rural markets offer significant growth potential • The organised Indian retail industry has begun experiencing an increased level of activity in the private label space • Private label strategy is likely to play a dominant role as its share in the US and the UK markets is 19 per cent and 39 per cent, respectively while its share in India is just 6 per cent Private label opportunities GROWTH OPPORTUNITIES IN INDIAN RETAIL INDUSTRY
- 24. ATTRACTIVE INVESTMENT SEGMENTS • Retailcomponent of real estate is an attractive opportunity which is currently attracting 29 per cent of total investment in real estate • 26 per cent of the overall investors are interested in investing in Tier II and III cities • Training and warehouse spacing are the other viable options for investments
- 25. CONCLUSION • Emerging retailformats offer an ideal shopping experience with an amalgamation of product, entertainment and service • The hypermarkets, malls, supermarkets are the preferred kind of stores by consumers • The dynamics of the demographics, double income, urbanization and internet revolution are the factors contributing to retail growth in India • Younger generation prefer to visit malls and hypermarkets more for stress relieving purpose