Indian retail industry analysis

RETAIL
INDUSTRY
jinsesunny@gmail.com

INDIAN RETAIL
INDUSTRY ANALYSIS

 Retail is the sale of goods and services from individuals or
businesses to the end-user.
 “A retailer is one who stocks the producers’ goods and is
involved in the act of it to the individual consumer, at the
“Margin of Profit “.
 As such retailing is the last link that connects the individual
consumer with the manufacturing and distribution chain.
 Selling Directly to consumer- selling in smaller units /
quantities in bulk.
 Very high numbers near to neighborhood.
 Reorganized by the service levels .
What is Retail?

According to Philip Kotler “ Retailing includes all
the activities involved in selling goods or services to the final
consumers for personal, non– business use.
Retaillier (French word), which means to cut off apiece or to
break bulk.
Any organization that does this selling is doing retailing.
Retail Sector today is worth of 394 Billion Us $

Barter
system
Weekly
market
Village
melas
Kirana
Stores
Conveni
ence
store
Government
Stores
Super
markets
Hyper
markets
Malls
Brand
outlets

 Barter System was known as the first form of retail.
 As time passed currency was exchanged for goods and
services.
 Hawkers carried out the first Retailing in Push Carts
 Followed by Kirana Stores …….. Mom and Pop Stores
 Finally Manufacturing era necessitated the small stores
and Specialty stores
Evolution Of Retail

 It was a seller market still than this point of time with the
limited no of brands available .
 Barter chain  Single brand franchise chain Stand alone large
store  Chain of large stores and finally Malls.
 Economist says that Boom has Started of Retail due to more
spending Capacity of Indians
 Emerging of retail started in brief in patterns like changing face of
the Indian retail sector
 Provide customers with 3 Vs i.e. Value, Variety and Volume.

Interesting facts on
retail
 Every 10th billionaire is a retailer.
 25 of the top 50 Fortune 500 companies are in Retail.
 In India the Retailing Industry provides employment to over 18 m people,
second largest after agriculture.
 1 out of every 25 families in India are engaged in the business of retailing
 72% of Indian population staying in rural market.
 In India Per Capita square feet area under retail is just 2 sq. ft. or 0.2 sq. m.jinsesunny@gmail.com

Retailing in India is one of the pillars of its economy and
accounts for 14% to 15 % of its GDP.
Indian retail industry is the second largest employer in the
country with almost 12million retail stores in India.
The Indian retail market is estimated to be US$ 450 billion and
one of the top five retail markets in the world by economic
value.
India is one of the fastest growing retail market in the world,
with 1.2 billion people.
India's retailing industry is essentially owner manned small
shops.
Retailing In India

Most Indian shopping takes place in open markets or millions
of small, independent grocery and retail shops.
Shoppers typically stand outside the retail shop, ask for what
they want, and cannot pick or examine a product from the
shelf.
The product typically has no price label in these small retail
shops; although some products do have a manufactured
suggested retail price (MSRP) pre-printed on the packaging.
Price is sometimes negotiated between the shopper and
shopkeeper.

India's retail and logistics industry, organized and unorganized
in combination, employs about 40 million Indians (3.3% of
Indian population).
The unorganized retail shops typically offer no after-sales
support or service.
Until the 1990’s, regulations prevented innovation and
entrepreneurship in Indian retailing.
Through the 1990s, India introduced widespread free market
reforms, including some related to retail.

Between 2000 to 2010, consumers in select Indian cities have
gradually begun to experience the quality, choice, convenience
and benefits of organized retail industry.
In 2010, larger format convenience stores and supermarkets
accounted for about 4 % of the industry, and these were present
only in large urban centres.
Until 2011, Indian central government denied foreign direct
investment (FDI) in multi-brand retail, forbidding foreign groups
from any ownership in supermarkets, convenience stores or any
retail outlets.

Even single-brand retail was limited to 51% ownership and a
bureaucratic process.
In November 2011, India's central government announced retail
reforms for both multi-brand stores and single-brand stores.
These market reforms paved the way for retail innovation and
competition with multi-brand retailers such as Walmart,
Carrefour and Tesco, as well single brand majors such as IKEA,
Nike, and Apple.
In December 2011, under pressure from the opposition, Indian
government placed the retail reforms on hold till it reaches a
consensus.

In January 2012, India approved reforms for
single-brand stores welcoming anyone in the
world to innovate in Indian retail market with
100% ownership, but imposed the requirement
that the single brand retailer source 30 % of its
goods from India.

12th largest economy in the world
4th largest in purchasing-power
parity terms
Over 58% of Indian population
below 26yrs.
That is over 564 million people,
nearly twice the total population
of the United States
Indian Retail Scenario Today

Market & Composition
Total No. of Retail stores in India
12-15 Million
Hawkers
8-10 Million
Grocery Outlets
4-5 Million
Urban Grocery Outlets
1 Million
Over
96% of
Indian Retail
is unorganizedjinsesunny@gmail.com

LARGER MALLS (1M Sq.ft)2004-5
2000
Multiplex &
Leisure Cinema
Discount
Stores
MALLS
1990
MALLS
(Price, Quality, Service & Entertainment)
1980
DEPARTMENTAL STORES
(Price, Quality, Service Sensitive)
BEFORE
1980
TRADITIONAL RETAIL
(Price Sensitive)
Market & Composition
4%
rapidly evolving
modern organized Retailjinsesunny@gmail.com

Growth over 1997-2010
India in 1997 allowed foreign direct investment (FDI) in cash and
carry wholesale.
Between 2000 to 2010, Indian retail attracted about $1.8 billion
in foreign direct investment, representing a very small 1.5% of
total investment flow into India.
Single brand retailing attracted 94 proposals between 2006 and
2010, of which 57 were approved and implemented.
For a country of 1.2 billion people, this is a very small number.
Some claim one of the primary restraint inhibiting better
participation was that India required single brand retailers to
limit their ownership in Indian outlets to 51%.
Growth Of Retail Sector In India

 Indian retail has experienced limited growth, and its spoilage of
food harvest is amongst the highest in the world, because of
very limited integrated cold-chain and other infrastructure.
Growth after 2011
Before 2011, India had prevented innovation and organized
competition in its consumer retail industry.
Reports estimates the 2011 Indian retail market as generating
sales of about $470 billion a year, of which a miniscule $27
billion comes from organized retail such as supermarkets, chain
stores with centralized operations and shops in malls.

 A 25% market share, given the expected growth of Indian retail
industry through 2021, is estimated to be over $250 billion a year.
 This is equal to the 2009 revenue share from Japan for the
world's 250 largest retailers.
 The Economist forecasts that Indian retail will nearly double in
economic value, expanding by about $400 billion by 2020.
 The projected increase alone is equivalent to the current retail
market size of France.

20%
8%
16%
6%
14%
USA
China
Japan
Brazil
India
Contribution Respective
to GDP

0 20 40 60 80 100
India
China
Indonesia
Thailand
Malaysia
Taiwan
US
Organised
Unorganised
US Taiwan Malaysia Thailand Indonesia China India
Unorganised 15% 19% 45% 60% 70% 80% 95%
Organised 85% 81% 55% 40% 30% 20% 5%

Indian retail story remains intact with
strong fundamentals:
Consumer incomes growing
 Consumer aspirations rising
 Growing urbanization
 Still Very Low Penetration of Modern
Retail
 Growth in Modern retail’s capability to
achieve and share efficiencies across the
value chain
Economic slowdown/
inflation not crippling
the opportunity

Types Of Retail Sectors In India
FOOD AND GROCERY RETAIL
- The business in India is largely unorganized adding up to
barely Rs.400 billion, with other large players adding 50 per cent
that.
- The all India food consumption is close to Rs.9000 billion,
with the total urban consumption being around Rs.3300 billion.
-The aggregate revenues of large food player is currently only
5 per cent of total Indian market, and around 15-20 per cent of
total urban food consumption.
- Most food is sold in the local “wet market”, vendors,
roadside push cart sellers or tiny kirana stores.

- According to McKinsey report, the share of an Indian
household’s spending on food is one of the highest in the world,
with 48 per cent of income being spent on food and beverages.
GEMS AND JEWELLERY RETAIL
- The gems and jewellery market is the key emerging area,
accounting for a high proportion of retail spends.
- India is the largest consumer of gold in the world with an
estimated annual consumption of 1000 tonnes, considering actual
imports and recycled gold.
- The market for jewellery is estimated upwards of Rs.650
billion.

APPAREL RETAIL
-The ready-mades and western outfits are growing at 40-45 per
cent annually.
-The market teams up with international brands and new
entrants entering this segment creates a Rs. 5 billion market for
the premium grooming segment would grow to Rs.3 billion in next
three years.
PHARMACEUTICALS RETAILS
-The pharma retailing is estimated at about Rs.300 billion, with
15 per cent of the 51 lakh retail stores in India being chemists.

- Pharma retailing will follow the trend of becoming more
organised and corporatized as is seen in other retailing
formats(food, apparel etc.).
- A few corporates who have already forayed into this segment
include Morepen, Medicine shoppe, Appollo Health from SAK
industries.
- In the south, RPG group’s Health&Glow is already in this
category, though it is not a pure play pharma retailer but more in
the health and beauty care business.

 MUSIC RETAIL
- The size of Indian music industry, as per this images-KSA
Study, is estimated at RS. 11 billion .
- It is of which about 36 per cent is consumed by pirated
market.
- Organized music retailing constitutes about 14 per cent,
equivalent to Rs.1.5 billion.
BOOK RETAIL
- The book industry is estimated at over Rs.30 billion out of
which organised retail accounts for only 7 per cent(at Rs.2.10
billion).

- This segment is seen to be emerging with text and curriculum
books accounting about 50 per cent of total sales.
- The gifting habit in India is catching on fast with books
enjoying a significant share, thus expecting this sector to grow by
15 per cent annually.
 CONSUMER DURABLE RETAIL
-The consumer durables market can be stratified into consumer
electronics comprising of TV sets, audio systems, VCD players and
others.
-The existing size of this sector stands at an estimated US$ 4.5
billion with organized retailing being 5 per cent.

Indian Shopping Basket
16%
3%
9%
5%
4%
3%
50%
GROSS RENT, FUEL & POWER
MEDICAL & HEALTH
CLOTHING & FOOTWEAR
RECREATION, EDUCATION &
CULTURAL
FURNITURE APPLIANCES
FOOD BEVERAGES & TOBACCO
TRANSPORT &
COMMUNICATION

Format Of Retail In India
 Mom-and-pop stores: They are family owned business
catering to small sections; they are individually handled
retail outlets and have a personal touch.
 Departmental stores: They are general retail
merchandisers offering quality products and services.
 Convenience stores: Are located in residential areas
with slightly higher prices goods due to the
convenience offered.

 E-tailers: Are retailers providing online buying and selling
of products and services.
 Discount stores: These are factory outlets that give
discount on the MRP.
 Vending: It is a relatively new entry, in the retail sector.
Here beverages, snacks and other small items can be
bought via vending machine.
 Shopping malls: The biggest form of retail in India, malls
offers customers a mix of all types of products and
services including entertainment and food under a single
roof.

 Category killers: Small specialty stores that offer a variety
of categories.
 They are known as category killers as they focus on
specific categories, such as electronics and sporting
goods.
 This is also known as Multi Brand Outlets or MBO's.
 Specialty stores: Are retail chains dealing in specific
categories and provide deep assortment.
 Mumbai's Crossword Book Store and RPG's Music World
are a couple of examples.

 Wholesale stores: Selling goods in bulk quantity only
e.g. metro and Shoprite holding.
 Hypermarts/Supermarkets: Large self-service outlets,
catering to varied shopper needs are termed as
Supermarkets

Types of Retailing Formats
 Based on Ownership
 Independent Retailers
 Chain Retailers
 Franchisees
 Leased Department
Stores/Shop-In Shops
 Co-operatives
 Special Formats
 E-tailers
 Direct Selling
 Vending Machine/Kiosk/Airport
 Based on Assortment
 Convenience Stores
 Supermarkets
 Hypermarkets
 Specialty Stores
 Department Stores
 Off-Price Stores
 Category Killers

Factors that attracted major industry
players to enter the retail sector
Phenomenal success of certain players in retail
sector
Eg: Shopper’s Stop
Hype created by management consultants and
media
Phenomenal growth of service sector and down
turn in manufacturing sector
A good way to leverage existing property
Eg: Primals started developing Crossroads after closing of
Roche factory they have acquired on prime property in Mumbai

 Globalization
 Success of organized retail sector in developed
countries
 Changes in Consumer behavior and increase in their
purchasing power.
 Ever green demand for basic things like food
 Negative working capital ; Companies buy on credit
and sell for cash

• Indian retail sector :
Employs 8% (35 million)of the working population.
Could yield 12 to 15 million retail jobs in the coming five years.
• Out of which organized segment is about 0.3 million.
• Retail sector grew at 9.4% on real terms & 15.4% on nominal
terms.

Profile Required
MBA Graduates with 5-
10years of Experience
Graduates with 2-5years of
Experience
Graduates/ 12th Pass/ 10th
Pass
Graduates/ 12th Pass/ 10th
Pass

 Pantaloon Retail (India) Limited, is a large Indian retailer, part of
the Future Group, and operates in multiple retail formats in
both, value and lifestyle, segments of the Indian consumer
market.
 Headquartered in Mumbai, the company has over 1,000 stores
across 71 cities in India and employs over 30,000 people.
 As of 2010, it was the country's largest listed retailer by market
capitalization and revenue.
 The company’s brands include Pantaloons, a chain of fashion
outlets, Big Bazaar, a hypermarket chain, and Food Bazaar, a
supermarket chain.
 Total Revenue: 60.190 billion (US$1.2 billion)
Pantaloon Retail India

The company is present across several lines of business
which have various formats
 Fashion - Pantaloons, Central, aLL, Brand Factory, Blue Sky, Top 10,
Fashion Station, Big Bazaar, Lee Cooper (JV)
 General Merchandise - Big Bazaar, Shoe Factory, Navras, Electronics
Bazaar, Furniture Bazaar, KB'S FAIR PRICE, Food Rite
 E-tailing (online shopping) - www.futurebazaar.com
 Leisure and entertainment - Bowling Co., F123, TGIF (Thank God it's
Friday!)
 Consumer durables - Koryo, Sensei, IPAQ
 Service - E Care, H Care , Design & Service
 Malls - Central (Bangalore, Hyderabad, Pune, Mumbai,Kochi,
Vadodara, Gurgaon, Indore, Ahmedabad, Thane
Lines of Business

 Reliance Retail, Ltd. is a subsidiary company of Reliance
Industries.
 Founded in 2006 and based in Mumbai,it is the second largest
retailer in India.
 Its retail outlets offer foods, groceries, apparel and footwear,
lifestyle and home improvement products, electronic goods, and
farm implements and inputs.
 The company’s outlets also provide vegetables, fruits, and
flowers. It focuses on consumer goods, consumer durables,
travel services, energy, entertainment and leisure, and health
and well-being products, as well as on educational products and
services.
Reliance Retail

 Reliance Fresh - Retail Outlets of fruits, Vegetables & Groceries.
 Reliance Digital - Consumer Electronics retail Store
 Reliance Jewels - Jewellery
 Reliance Time Out - Lifestyle store of Books, Music, Movies,
Toys, Gaming, Fragrances, Stationery.
 Reliance Trends - Apparel and Clothing
Subsidiaries & Divisions

 Shoppers Stop is an Indian department store chain promoted by
the K Raheja Corp Group (Chandru L Raheja Group), started in
the year 1991 with its first store in Andheri, Mumbai.
 Shoppers Stop retails a range of branded apparel and private
label under the following categories of apparel, footwear,
fashion jewellery, leather products, accessories and home
products.
 These are complemented by cafe, food, entertainment,
personal care and various beauty related services.
 Shoppers Stop launched its e-store with delivery across major
cities in India in 2008.
 The website retails all the products available at Shoppers Stop
stores, including apparel, cosmetics and accessories.
Shoppers Stop

 Shoppers Stop has 97 stores across the country (with the latest
one being the outlet at Kumar Pacific Mall, Pune) including
three airport stores.
 Shoppers Stop retails products of domestic and international
brands such as Louis Philippe, Pepe, Arrow, BIBA, Gini & Jony,
Carbon, Corelle, Magppie , Nike, Reebok, LEGO, and Mattel.
 Shoppers Stop retails merchandise under its own labels, such
as STOP, Kashish, LIFE and Vettorio Fratini, Elliza Donatein,
Acropolis etc.
 Total Revenue: Rs 60.190 billion (US$1.2 billion)

 First outlet in 1973.
 The Landmark Group provides a value-driven product range for the
entire family through a diverse portfolio of core retail brands.
 This includes a host of home grown brands in addition to international
franchise offerings
Key Facts
 Turnover in excess of USD 4.7 billion
 Strong growth at a CAGR of 23%
 Presence in 17 countries with over 1000 outlets
 Over 18 million sq. ft. of retail space
 Team of Over 40,000 employees.
Landmark Group

Landmark brands
 Home Centre
 Centre point
 Baby shop
 Splash
 Shoe Mart
 Lifestyle
 Beauty bay
 Iconic
 Q Home Décor
 Candelite
 Max
 Shoexpress
 Emax
 Lifestyle Department Stores
 SPAR hypermarkets

Key Figures
0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000
2011-12
2010-11
2009-10
2008-09
2007-08
Sales(USD million)
2011-12
2010-11
2009-10
2008-09
2007-08

ADITYA BIRLA GROUP
 A $35 billion corporation,
 The Aditya Birla Group is in the League of Fortune 500.
 Force of over 133,000 employees.
 Belonging to 42 different nationalities.
 The Group has been ranked Number 4 in the Global 'Top
Companies for Leaders' survey
 Ranked Number 1 in Asia Pacific for 2011.
 The group has diversified business interests and is dominant
player in all the sectors in which it operates such as viscose
staple fibre, metals, cement, viscose filament yarn, branded
apparel, carbon black, chemicals, fertilisers, insulators, financial
services, telecom, BPO and IT services.

Globally- the Aditya Birla Group
 No.1 in viscose staple fibre
 No.1 in carbon black
 The fourth-largest producer of insulators
 The fifth-largest producer of acrylic fibre
 Among the top 10 cement producers
 Among the best energy-efficient fertiliser plants
 The largest Indian MNC with manufacturing operations in the
USA

Aditya Birla Group - In India
 A top fashion (branded apparel) and lifestyle player
 The second-largest player in viscose filament yarn
 The largest producer in the alkali sector
 Among the top three mobile telephony companies
 A leading player in life insurance and asset management
 Aditya Birla Retail Ltd. expanded its presence across the
country under the brand "more." with 2 formats Supermarket
& Hypermarket.
 Among the top 10 BPO companies

SWOT ANALYSIS

Strength…..
 Demographic favour
 Rising disposable income
 Increase in number of people in earner category
 Urbanization
 Shopping convenience
 Low labour cost of skilled ones
 Changing consumer habits and lifestyles.
 Plastic card revolution.
 Greater availability of quality retail space.

 Policy related issues-
- lack of industry status for retail.
- numerous licence, permits and registration requirement.
- farmer and retailer unfriendly APMC act.
 Limited consumer insight-
- lack of detailed region specific customer data.
- less data on spending pattern.
 Inadequate human resources-
- lack of trained personnel at all level.
- stringent employment and industry laws.
- fragment approach to human resources.
Weakness…..

 Taxation hurdle
- inconsistent octroi and entry tax structure.
- VAT and multiple taxation issues.
- large grey market presence.
 Underdeveloped supply chain
- underdeveloped logistics infrastructure.
- absence of national cold chain networks.
- lack of national distribution networks and hubs
 Lack of adequate utilities
- lack of basic infrastructure like power, transport and
communication creates difficulty in sustaining retail operations across
the large geographical spread of country.

 Potential for investment.
 Locational advantage.
 Sectors with high growth potential.
 Fastest growing formats.
 Rural retail.
 Wholesale trading.
 E-retailing.
 Retail franchising.
Opportunities…..

 Political issues.
 Social issues.
 Inflation.
 Lack of differentiation among the malls that are
coming.
 Poor inventory turns and stock availability measures.
Threats…..

Investment done by citizens and
government of one country (home
country) invest in industries of
another country (host country).
Foreign
Investment
through
Foreign
Direct
Investments
Foreign
Institutional
Investors

 Incentives attract FDI.
 Market size and potential are sufficient inducers.
 Tax breaks, import duty exemptions, land and power
subsidies, and other enticements.

FDI in Multibrand retail
ADVANTAGES
 Better choice for
customers
 Quality products
 Job opportunities
 More capital investments
– good for our BOP
 Parasite retailing
 Increases Forex reserve
 Technological
advancements
DISADVANTAGES
 Threat for small scale
retailers in villages
 High competition
 Deletion of supply chain
levels
 Consumerism increases

0
0.2
0.4
0.6
0.8
1
1.2
1.4
2008 2011 2013 2018
0.35
0.59
0.83
1.3
Expected Growth
CAGR
10%
• In the last four year, the
consumer spending in India
climbed up to 75%.
• By the year 2013, the
organized sector is also
expected to grow at a CAGR of
40%.
• The total number of shopping
malls is expected to expand at a
CAGR of over 18.9 per cent by
2015.

Ten
Customer
Experience
E-tailing
Technology/MIS
Services
Hot
Category
Management
Integrated
Marketing/Social
Networking
Dynamic Pricing
Trends
Private Label
Use of Metrics
Innovative
Formats/Models

CONCLUSION
 Opportunity awaits for MBA’s like us
 Strat thinking about retail industry dear aspiring
entrepreneurs of MIIM
 Government is soon expected to allow FDI in multi brand retail
– will double the opportunities.
 Let us hope for the best !!!!!!

Jinse Sunny
+91 9497451464

Indian retail industry analysis

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