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Global retail scenario and it's future


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Presentation explains the future of organized retail worldwide...

Global retail scenario and it's future

  1. 1. Global Retailing Scenario & Its Future By: Varun modi ROLL NO. 4472
  2. 2. IN TRODUCTION TO RETAILING <ul><li>Retailing consists of the sale of goods or merchandise for personal or household consumption either from a fixed location such as a shopping mall or store, or from a fixed location and related subordinated services. </li></ul><ul><li>In commerce , a retailer buys goods or products in large quantities from manufacturers or importers , either directly or through a wholesaler , and then sells individual items or small quantities to the general public or end-user customers , usually in a shop, also called a store. </li></ul><ul><li>Retailers are at the end of the supply chain . Marketers see retailing as part of their overall distribution strategy. </li></ul>
  3. 3. <ul><li>Retail comes from the French word retaillier which refers to &quot;cutting off, clip and divide&quot; in terms of tailoring (1365). </li></ul><ul><li>It first was recorded as a noun with the meaning of a &quot;sale in small quantities&quot; in 1433 (French). </li></ul><ul><li>Its literal meaning for retail was to &quot;cut off, shred, paring&quot;. </li></ul><ul><li>In both Dutch and German also refer to sale of small quantities or items. </li></ul>Etymology
  4. 4. <ul><li>Shopping is the purchase of goods and services from retailers .Shopping involves selection and purchase </li></ul><ul><li>&quot;Window shopping&quot; is an American/English phrase meaning to look into glass windows of a shop for entertainment and imagine purchasing items without actually purchasing, possibly just to pass the time between other activities, or planning a purchase. </li></ul><ul><li>“ Screen shopping&quot; is derived from this term but applies to online retail stores (i.e., window shopping through a computer screen). </li></ul><ul><li>“ Internet Shopping”(eBay, Amazon) </li></ul><ul><li>Shopping is fun for some people. </li></ul>Shopping
  5. 5. <ul><li>Modern Format retailers (Organized retailing) </li></ul><ul><ul><li>Supermarkets (Subhiksha) </li></ul></ul><ul><ul><li>Hypermarkets (Big Bazaar) </li></ul></ul><ul><ul><li>Department Stores (Shoppers Stop) </li></ul></ul><ul><li>Cash & carry (wal-mart yet to come) </li></ul><ul><ul><li>Company Owned Company Operated (Bata) </li></ul></ul><ul><li>Traditional Format Retailers (Unorganized Retailing) </li></ul><ul><ul><li>Traditional Mom and Pop Stores: (KIRANA) </li></ul></ul><ul><ul><li>Kiosks </li></ul></ul><ul><ul><li>Street Markets </li></ul></ul><ul><ul><li>Exclusive /Multiple Brand Outlets </li></ul></ul>Classifying Retail
  6. 6. <ul><li>In France , the dominant chain is Carrefour </li></ul><ul><li>2nd largest chain of hypermarkets in the world after Wal-Mart </li></ul><ul><li>Hypermarket is a superstore which combines </li></ul><ul><li>a supermarket and a department store . </li></ul><ul><li>Gigantic retail facility carries an enormous </li></ul><ul><li>range of products under one roof. </li></ul><ul><li>A consumer can ideally satisfy all of his or her routine </li></ul><ul><li>weekly shopping needs in one trip to the hypermarket. </li></ul><ul><li>A typical Wal-Mart Supercenter covers 150,000 square feet, </li></ul><ul><li>A typical Carrefour 210,000 square feet </li></ul><ul><li>Hypermarkets choose suburban or out-of-town </li></ul><ul><li>locations that are easily accessible by automobile. </li></ul><ul><li>The concept was pioneered by Carrefour upon opening </li></ul><ul><li>its first such store in 1962 at Sainte-Geneviève-des-Bois , France </li></ul>H ypermarket
  7. 7. S upermarket A supermarket is a departmentalized self-service store offering a wide variety of food and household merchandise. I t is larger in size and has a wider selection than a traditional grocery store . T he traditional supermarket occupies a large floor space on a single level and is situated near a residential area in order to be convenient to consumers T he first true supermarket in the United States was opened by ex- Kroger employee Michael J. Cullen , on August 4 , 1937 , in a 6,000 square foot (560 m²) former garage in Jamaica, Queens , New York
  8. 8. Department Store <ul><li>Department stores usually sell products : </li></ul><ul><li>A pparel </li></ul><ul><li>F urniture </li></ul><ul><li>E lectronics A ppliances </li></ul><ul><li>P aint </li></ul><ul><li>Toiletries & C osmetics </li></ul><ul><li>Photographic equipment </li></ul><ul><li>J ewellery </li></ul><ul><li>T oys </li></ul><ul><li>S porting goods . </li></ul>
  9. 9. Convenience store A convenience store is a small store or shop , generally accessible or local. Alongside ,busy roads, gas/petrol stations . Railway stations ,densely-populated urban neighborhoods. Items offered are milk , bread , soft drinks , cigarettes , coffee , slurpees , candy bars , sandwiches , pizza hot dogs , ice cream , candy , gum , chips , popcorn , maps , magazines , newspapers , small toys , feminine hygiene products, cat food , dog food , and toilet paper . CD , DVD , video game For meeting immediately or temporarily requirements.
  10. 10. Cash and Carry <ul><li>Goods are sold from a wholesale warehouse operated either on a self-service basis or on the basis of samples retailers </li></ul><ul><li>Professional users, caterers, institutional buyers are customers </li></ul><ul><li>Wholesalers buy from manufacturers and sell mostly to retailers </li></ul><ul><li>Selling and promoting, buying and assortment building, warehousing, transporting, financing, risk-bearing, supplying market information, and providing management services </li></ul><ul><li>Cash and carry wholesaler arrange the transport of the goods themselves and pay the goods in cash and not on credit </li></ul><ul><li>100% FDI is allowed in this format in INDIA. </li></ul><ul><li>WAL-MART & BHARTI. Joint venture based on this strategy. </li></ul><ul><li>METRO(GERMANY), CARREFOUR(FRANCE),TESCO(U.K) planning to enter through the same format. </li></ul>
  11. 11. O ther retailing Formats Kiosk Variety store
  12. 12. <ul><li>Berjaya Times Square in Kuala Lumpur, Malaysia , is 700,000 m². (approximately 7 million square feet). </li></ul><ul><li>Beijing's Golden Resources Shopping Mall , opened in October 2004, is the world's largest, at 600,000 m² (approximately 6 million square feet). </li></ul><ul><li>SM Mall of Asia in the Philippines , opened in May 2006, is the world's third largest at 386,000 m² square meters of gross floor area with further expansions still ongoing. </li></ul><ul><li>The Mall of Arabia inside Dubailand in Dubai , United Arab Emirates , which will open in 2008 , will become the largest mall in the world, at 929,000 square meters (10 million sq. feet ).(22000 small shops of avg 50 sq.yds in india) </li></ul>W orld`s largest Malls
  13. 13. G lobal Retailing Facts <ul><ul><li>World’s largest private industry </li></ul></ul><ul><ul><li>Above US $ 8 trillion sales worldwide annually </li></ul></ul><ul><ul><li>Accounts for almost 10% of GDP in most countries </li></ul></ul><ul><li>Major employer in most economies </li></ul><ul><ul><li>16% in US </li></ul></ul><ul><ul><li>15% in Brazil </li></ul></ul><ul><ul><li>12% in Poland </li></ul></ul><ul><ul><li>7% in China </li></ul></ul><ul><li>Generates competition which results in </li></ul><ul><ul><li>reduction of prices </li></ul></ul><ul><ul><li>product and service innovation </li></ul></ul><ul><ul><li>enhanced customer experience </li></ul></ul><ul><li>Major driver for real estate and urban development </li></ul>
  14. 14. Biggest retail Sales countries of the world <ul><li>U.S U.S $ 4 tn (13 times of Indian market) </li></ul><ul><li>E.U U.S $ 2 tn </li></ul><ul><li>JAPAN U.S $ 1 tn </li></ul><ul><li>CHINA U.S $ 750 bn </li></ul><ul><li>U.K U.S $ 444 bn </li></ul><ul><li>INDIA U.S $ 300 bn </li></ul><ul><li>RUSSIA U.S $ 200 bn </li></ul>
  15. 15. Biggest retailers of the World U.S.A FRANCE U.S.A U.S.A U.K US $316 Bn US $95 Bn US $73 Bn US $62 Bn US$56 Bn
  16. 16. Reason For Success of Global Retailers <ul><li>Better Consumer Demand </li></ul><ul><li>Better Consumer Confidence </li></ul><ul><li>Computer Operated Depots </li></ul><ul><li>Better Logistical System </li></ul>
  17. 22. Weekly Markets Village Fairs Melas Convenience Stores Mom and Pop/Kiranas PDS Outlets Khadi Stores Cooperatives Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls Traditional/Pervasive Reach Government Supported Historic/Rural Reach Modern Formats/ International Evolution of Indian retail Source of Entertainment Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency
  18. 23. Evolution of Indian retail <ul><li>Informal retailing Sector </li></ul><ul><ul><li>Typically small retailers. </li></ul></ul><ul><ul><li>Evasion of taxes </li></ul></ul><ul><ul><ul><li>Difficulty in enforcing tax collection mechanisms </li></ul></ul></ul><ul><ul><li>No monitoring of labor laws </li></ul></ul><ul><li>Formal Retailing Sector </li></ul><ul><ul><li>Typically large retailers </li></ul></ul><ul><ul><li>Greater enforcement of taxation mechanisms </li></ul></ul><ul><ul><li>High level of labor usage monitoring </li></ul></ul>
  19. 24. Large Indian retailers <ul><li>Hypermarket </li></ul><ul><ul><li>Big Bazaar </li></ul></ul><ul><ul><li>Giants </li></ul></ul><ul><ul><li>Shoprite </li></ul></ul><ul><ul><li>Star </li></ul></ul><ul><li>Department store </li></ul><ul><ul><li>Lifestyle </li></ul></ul><ul><ul><li>Pantaloons </li></ul></ul><ul><ul><li>Piramyds </li></ul></ul><ul><ul><li>Shoppers Stop </li></ul></ul><ul><ul><li>Trent </li></ul></ul><ul><li>Entertainment </li></ul><ul><ul><li>Fame Adlabs </li></ul></ul><ul><ul><li>Fun Republic </li></ul></ul><ul><ul><li>Inox </li></ul></ul><ul><ul><li>PVR </li></ul></ul>
  20. 25. The changing Indian consumer <ul><li>Greater per capita income </li></ul><ul><ul><li>Increase in disposable income of middle class households </li></ul></ul><ul><ul><li>20.9%* growth in real disposable income in ’99-’03. </li></ul></ul><ul><li>Growing high and middle income population </li></ul><ul><ul><li>Growing at a pace of over 10%* per annum over last decade </li></ul></ul><ul><li>Affordability growth </li></ul><ul><ul><li>Falling interest rates </li></ul></ul><ul><ul><li>Easier consumer credit </li></ul></ul><ul><ul><li>Greater variety and quality at all price points </li></ul></ul>† From Euromonitor Retail Survey
  21. 26. <ul><li>The urban consumer </li></ul><ul><ul><li>Getting exposed to international lifestyles </li></ul></ul><ul><ul><li>Inclined to acquiring asset </li></ul></ul><ul><ul><li>More discerning and demanding than ever </li></ul></ul><ul><li>No longer need-based shopping </li></ul><ul><ul><li>Shopping is a family experience </li></ul></ul><ul><li>Changing Mindset </li></ul><ul><ul><li>Increasing tendency to spend </li></ul></ul><ul><ul><li>Post Liberalization children coming of age </li></ul></ul><ul><ul><ul><li>100 mn 17-21 year olds*. Tend to spend freely. </li></ul></ul></ul><ul><li>Greater levels of education </li></ul>The changing Indian consumer
  22. 27. Anticipated growth <ul><li>Market size </li></ul><ul><ul><li>Current market size is roughly US$ 300 bn </li></ul></ul><ul><ul><li>Only 3% is through organized retailing </li></ul></ul><ul><ul><li>96% of the 12 Million stores are less than 500 Sq. ft. </li></ul></ul><ul><ul><li>Forecast Growth rate for the retailing industry is roughly 8.3% for 2003-2008 </li></ul></ul><ul><ul><li>Sales from large format stores would rise by 24-49% </li></ul></ul><ul><ul><li>Formal and modern format retailing would enjoy rapid growth </li></ul></ul>
  23. 28. India`s growing no. of domestic retail chains
  24. 29. FDI in Indian retailing <ul><li>Current Indian FDI Regime </li></ul><ul><ul><li>FDI not permitted in retail trade sector, except in: </li></ul></ul><ul><ul><ul><li>Hi-Tech items / items requiring specialized after sales service </li></ul></ul></ul><ul><ul><ul><li>Medical and diagnostic items </li></ul></ul></ul><ul><ul><ul><li>Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator) </li></ul></ul></ul>
  25. 30. FDI in Indian retailing <ul><li>No FDI is allowed in multiple brand retailing </li></ul><ul><li>100% FDI allowed in cash & carry format(e.g Walmart-Bharti) </li></ul><ul><li>51% FDI allowed in single brand retailing(Nike,Gucci,Versace,Mcdonald) </li></ul>
  26. 31. How FDI ? <ul><li>FDI should be allowed in stages </li></ul><ul><ul><li>Initial stages: 26% FDI </li></ul></ul><ul><ul><li>Establishment Phase: 49% FDI </li></ul></ul><ul><ul><li>Mature Phase: 100% FDI </li></ul></ul><ul><li>FDI policy </li></ul><ul><ul><li>No incentives needed to attract FDI </li></ul></ul><ul><ul><li>Market size and potential are sufficient inducers </li></ul></ul><ul><ul><li>No need for costly tax breaks, import duty exemptions, land and power subsidies, and other enticements </li></ul></ul>3 yrs. 3 yrs.
  27. 32. H ot Destinations Tier 1 cities: Delhi,Mumbai,Kolkata,Chennai Tier 2 cities: Hyderabad, Bangalore, Ahmedabad, Gurgaon, Pune, Baroda,Noida Tier 3 cities: Chandigarh, Coimbatore, Trivandrum, Faridabad, Ludhiana, Cochin, Shimla, Mysore,Amritsar
  28. 33. Prevailing Major Players Forthcoming Mammoths Reliance Retail Bharti Retail Birlas Tatas Godrej Adhaar ITC e-choupal <ul><li>                  Future Group                    Trent Ltd                    RPG Enterprise                    Vishal Retail Ltd                     Shoppers Stop Ltd                    Bata India Ltd                     Provogue India Ltd                     </li></ul>
  29. 34. Case study : Chinese retailing <ul><li>FDI permitted in 1992. 40 foreign retailers have secured approval </li></ul><ul><ul><li>Retail sales have grown@19.5% yoy since FDI was permitted </li></ul></ul><ul><li>FDI initially restricted to 6 major cities (including Beijing, Shanghai and Guangzhou) and SEZs </li></ul><ul><li>Foreign ownership initially restricted to 49% </li></ul><ul><li>US$ 22 bn of FDI attracted, 3.6% of total FDI </li></ul><ul><ul><li>In 2003, FDI in wholesale and retail was US$ 1.1 bn (Around 30% of our total FDI in 2003) </li></ul></ul><ul><li>Current restrictions on FDI will be phased out over 5 years as condition of WTO entry </li></ul>
  30. 35. 7 8 8 0 8 5 9 0 9 1 9 2 9 3 9 4 9 5 9 6 9 7 9 8 9 9 0 0 0 1 0 2 75 150 225 300 375 FDI in retail allowed US$ bn <ul><li>Retail sales grew @ 19.5% yoy for the next 4 years after the introduction of FDI in 1992 </li></ul>Years
  31. 36. Current News <ul><li>Eleven retailers gearing up for IPOs </li></ul><ul><li>40 retail players to spend $25 billion in next four years </li></ul><ul><li>Aditya Birla Group signifies intent to become leading player in retail industry </li></ul><ul><li>Big Bazaar to open 60 new stores </li></ul><ul><li>Shoppers’ Stop gears up for luxury retail </li></ul><ul><li>Reliance targets Rs. 100000 crs. Retail sales target </li></ul><ul><li>Dabur explores entering consumer retail business </li></ul><ul><li>The retail industry in India is estimated at $427 billion in 2010 and US$ 637 billion in 2015 </li></ul>
  32. 37. R ecommendations <ul><li>Grant industry status to retail </li></ul><ul><li>Permit FDI in Retail in phases </li></ul><ul><li>Invest in supply chain infrastructure </li></ul><ul><li>Ease distribution – infrastructure creation, octroi </li></ul><ul><li>Ensure single window clearance for retail chains </li></ul><ul><li>Organize market for real estate </li></ul><ul><ul><li>Ensure proper rent laws </li></ul></ul><ul><ul><li>Enforce zoning laws and city development plan </li></ul></ul><ul><ul><li>Increase land supply </li></ul></ul><ul><li>Ensure flexibility of labor laws </li></ul>
  33. 38. THANKS ! You Will always Shop In This Way in Future ! THANKS !