Non Grocery Retailers in Pakistan

NON-GROCERY RETAILERS IN PAKISTAN
Euromonitor International April 2013
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LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1 Trends .......................................................................................................................................... 1 Competitive Landscape ................................................................................................................ 2 Prospects ..................................................................................................................................... 3 Channel Formats .......................................................................................................................... 3 Chart 1 Chart 2 Chart 3 Chart 4 Chart 5 Chart 6 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 Non-Grocery Retailers: The Body Shop in Islamabad .................................. 3 Non-Grocery Retailers: Ideas by Gul Ahmed in Islamabad .......................... 4 Non-Grocery Retailers: Levis in Islamabad .................................................. 5 Non-Grocery Retailers: Borjan in Islamabad ................................................ 6 Non-Grocery Retailers: Mobile Zone in Islamabad ....................................... 7 Non-Grocery Retailers: Margalla Sports in Islamabad ................................. 8 Sales in Non-Grocery Retailers by Channel: Value 2007-2012 .................... 9 Non-Grocery Retailers Outlets by Channel: Units 2007-2012 .................... 10 Sales in Non-Grocery Retailers by Channel: % Value Growth 20072012 ........................................................................................................... 10 Non-Grocery Retailers Outlets by Channel: % Unit Growth 2007-2012 ..... 10 Non-Grocery Retailers Company Shares: % Value 2008-2012.................. 11 Non-Grocery Retailers Brand Shares: % Value 2009-2012 ....................... 11 Non-Grocery Retailers Brand Shares: Outlets 2009-2012 ......................... 11 Forecast Sales in Non-Grocery Retailers by Channel: Value 20122017 ........................................................................................................... 12 Forecast Non-Grocery Retailers Outlets by Channel: Units 2012-2017 ..... 12 Forecast Sales in Non-Grocery Retailers by Channel: % Value Growth 2012-2017 ..................................................................................... 12 Forecast Non-Grocery Retailers Outlets by Channel: % Unit Growth 2012-2017 .................................................................................................. 13
Channel Data ............................................................................................................................... 9
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HEADLINES
Non-grocery retailers increases by 14% in current value terms in 2012 to PKR873 billion Strong income growth pushes greater spending on non-grocery items Higher non-grocery sales at supermarkets and hypermarkets negatively affect specialist retailers The number of non-grocery retail outlets grows by 1% to reach 128,326 stores in 2012 Expansion in number of outlets is observed as main strategy for growth for major players Non-grocery retailers is predicted to post a strong constant value CAGR of 5% over the forecast period
TRENDS
Due to growth of the Pakistani population and higher level of disposable incomes, almost all channels of non-grocery retailers enjoyed strong growth in 2012. With higher incomes, consumers have more to spend on non-essential items such as non-grocery products. This was a common theme over the review period as the economy recovered from the 2008 financial crisis and incomes recovered to their pre-crisis levels. Non-grocery retailers witnessed a growth of 14% in terms of value in 2012, which was marginally slower than the 17% growth rate of 2011. The decline in non-grocery retailers was observed due to apparel specialist retailer, which suffered a decline in its growth rate from 17% in 2011 to 13% in 2012. While the value sales of non-grocery retailers is about 31% of total store based retailing as compared to 69% of grocery retailers in 2012, non-grocery retailing is nonetheless growing rapidly. As the standard of living improves in Pakistan, especially for the residents of the countrys big cities, regular consumer purchases have gone beyond lifes basic necessities. In terms of current value sales, the most important non-grocery retailers in Pakistan include apparel specialist retailers, electronics and appliance specialist retailers and jewellery and watch specialist retailers. These retailers have all established a strong presence in Pakistan due to rising popular demand for the products they sell. A large variety of others goods are also sold through non-grocery retailers such as health and beauty products and furniture and homewares. Apparel specialist retailers is particularly important in Pakistan because textiles are one of Pakistans leading exports. Locally produced apparel is of a high quality and aligned with local consumer tastes. It is for this reason that local clothing brands are better known than international brands in Pakistan. A boom (in the last two to three years of the review period) in the branding and sale of lawn (a type of cloth worn in the summer season) has boosted the visibility and value sales in apparel. Lawn brands have increased in number to around 70 from a paltry 5-6 over the review period this was caused by the increased focus of local textiles on domestic sales as export markets dry up. Sports goods retailers enjoyed the a growth of 23% in term of value in 2012. An increase in the number of young people and wider availability of sports goods was the reason for this remarkable growth. Spirits remained high in terms of cricket fans as the 2012 Cricket T20
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World Cup took place in September 2012. During such times, demand for sports goods increases substantially as people become interested in watching and playing the game. Football and tennis viewership has also increased; with Pakistani tennis star Aisam-ul-Haq rising into prominence after his US Open Doubles win in 2011 and higher coverage of club football as well as Euro Cup 2012. Mass merchandisers do not have any presence in Pakistan as local consumers still prefer to purchase non-grocery products from various retailing specialists which cover specific product groups such as apparel specialist retailers and home and garden specialist retailers. This is because these specialist retailers are considered to have a better understanding of their product areas and their customers needs as well as offering higher quality products. The share of home improvement and gardening stores and pet shops and superstores in Pakistan was marginal in 2012. This is because there is little demand for the products sold in these retail channels among the Pakistani population. Non-grocery retailers is growing rapidly in Pakistans urban areas in response to the rising disposable income levels among the urban population. The presence of non-grocery retailers is less prominent in rural areas where income levels are much lower than in Pakistans cities and there is less consumer demand for products beyond lifes basic necessities. However, non-grocery retailers started to move into Pakistans smaller cities and towns where it is acknowledged that there is huge potential for growth.
COMPETITIVE LANDSCAPE
Non-grocery retailers in Pakistan is very fragmented with many retailers covering different product areas. Canteen Stores Department is one of the leading non-grocery retailers. Run by the Pakistani Ministry of Defence, it serves a large and targeted customer base encompassing the personnel of the Pakistani Armed Forces, residents of Cantonment Board areas and the general public. Due to the fragmented nature of grocery retailers, it is difficult to comment on any significant increase or decrease of any single players share/sales in a year. Non-grocery retailers in Pakistan includes both established branded retailers and smaller traditional retailers. Established brand retailers position themselves according to high-quality product ranges and modern store design. Brand value, premium location and sophisticated interior design also add to the specific value of the products sold in such outlets. The goods sold by these retailers are often of established brands and sell for higher prices. Hence, established branded retailers usually target middle to high-income population segments. Small traditional non-grocery retailers do not focus as much on the branding of their products, focusing instead on store location and affordable prices in a bid to attract customers. There is little differentiation in place in terms of the stores and these often sell the same brands/products across the board. These retailers cater to the needs of lower income population segments. Established brand retailers are concentrated in Pakistans major cities. The majority of them are located in shopping centres and high streets. Hence, while they service a niche segment, specifically Pakistans more affluent consumers, they have only limited regional coverage. Both domestic and international non-grocery retailers have a strong presence in Pakistan and target different consumer groups. International retailers focus on upper-middle income consumers. Recognising the need to cater to local consumer tastes, many international retailers have integrated local elements into various aspects of retailing such as their store design and product ranges. However, the extremely high prices of the products render them accessible to only a small portion of the population. Run by local staff members, these stores
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provide the same friendly environment that domestic retailers offer. Domestic retailers cater to all segments of the population, the mass market in particular. Their competitive strength lies in lower prices, a larger customer base and a better understanding of local culture and consumer needs. There were no significant new entrants in non-grocery retailers in Pakistan during 2012. Most globally renowned brands in different product ranges such as apparel, electronics, beauty products and furniture are already available in Pakistan.
PROSPECTS
As the economic situation improves in Pakistan, non-grocery retailers is likely to experience strong growth over the forecast period. Falling inflation is also expected to boost consumer spending. Non-grocery retailers is predicted to grow by a constant value CAGR of 5% over the forecast period. This growth will be around the same level as the constant value growth over the review period The growth is expected to be driven by beauty specialist retailers, electronics and appliance specialist retailers and furniture and homeware store retailers. A continued influx of low-priced products from China and East Asian countries such as Thailand and Malaysia will drive growth in non-grocery retailers in Pakistan over the forecast period due to the lower prices and widespread availability of these products that would encourage consumers to purchase more non-grocery items. Non-grocery retailers will continue to choose highly profitable locations in shopping centres and on the high streets of Pakistans major cities in order to ensure that they capture the right consumer segments and gain the highest possible returns. Companies are likely to spend more on marketing and advertising as business and consumer confidence improves and competition intensifies. There is also a trend in terms of expanding to new residential areas and new shopping centres in order to gain a semblance of the first mover advantage. Besides department stores, health and beauty specialist retailers and sports goods stores are also expected to post strong growth during the forecast period. This is because Pakistani consumers are becoming more image conscious. Urbanisation brought about changes in lifestyle towards a greater emphasis on leisure activities. Hence, there is growing demand for health and beauty products and sports goods. All non-grocery retailing channels in Pakistan are expected to enjoy positive growth over the forecast period, apart from jewellery and watch specialist retailers, which is set to decline by a constant value CAGR of 1%. This is because the price of gold and silver has skyrocketed and alternative cheaper options, such as artificial jewellery gained higher share. Given the ongoing uncertainties in the Pakistani economy and the availability of low-cost imported products, non-grocery retailers in Pakistan needs to be able to react by expanding its product range so that consumers can have more attractive options in times of high inflation and prices.
CHANNEL FORMATS
Chart 1 Non-Grocery Retailers: The Body Shop in Islamabad
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Source:
Chart 2
Non-Grocery Retailers: Ideas by Gul Ahmed in Islamabad
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Source:
Chart 3
Non-Grocery Retailers: Levis in Islamabad
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Source:
Chart 4
Non-Grocery Retailers: Borjan in Islamabad
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Source:
Chart 5
Non-Grocery Retailers: Mobile Zone in Islamabad
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Source:
Chart 6
Non-Grocery Retailers: Margalla Sports in Islamabad
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Source:
CHANNEL DATA
Table 1 Sales in Non-Grocery Retailers by Channel: Value 2007-2012
PKR billion, retail value rsp excl sales tax 2007 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:
2008 294.5 39.1
2009 312.1 50.2
2010 337.1 56.7
2011 392.7 65.5
2012 443.8 76.5
248.8 30.0
25.8 5.7 57.4
27.9 7.5 67.4
30.7 9.2 78.9
34.2 10.8 91.6
38.3 13.7 107.3
43.2 16.6 120.7
10.7 60.9 439.3
12.9 77.2 526.5
15.1 91.3 587.5
17.7 105.9 654.0
22.4 126.0 766.1
27.4 145.0 873.0
Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources
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Table 2 outlets
Non-Grocery Retailers Outlets by Channel: Units 2007-2012
2007 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:
2008 86,214 1,605
2009 87,142 1,603
2010 88,092 1,619
2011 89,072 1,639
2012 90,072 1,664
85,214 1,589
8,988 1,010 14,578
9,164 1,087 14,920
9,324 1,106 15,093
9,533 1,126 15,286
9,732 1,147 15,515
9,935 1,169 15,771
62 9,291 120,732
69 9,321 122,380
77 9,385 123,730
81 9,455 125,192
88 9,535 126,728
95 9,620 128,326
Table 3
Sales in Non-Grocery Retailers by Channel: % Value Growth 2007-2012
% current value growth, retail value rsp excl sales tax 2011/12 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:
2007-12 CAGR 12.3 20.6 10.8 23.9 16.0 20.7 18.9 14.7
2007/12 Total 78.4 154.9 67.2 192.0 110.2 156.0 138.0 98.7
13.0 16.8 12.7 20.7 12.4 22.0 15.0 14.0
Table 4 % unit growth
Non-Grocery Retailers Outlets by Channel: % Unit Growth 2007-2012
2011/12 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers 1.1 1.5 2.1 1.9 1.7 8.0 0.9
2007-12 CAGR 1.1 0.9 2.0 3.0 1.6 8.9 0.7
2007/12 Total 5.7 4.7 10.5 15.7 8.2 53.2 3.5
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Non-Grocery Retailers
Source:
1.3
1.2
6.3
Table 5
Non-Grocery Retailers Company Shares: % Value 2008-2012
% retail value rsp excl sales tax Company Canteen Stores Department Waqar Traders Pvt Ltd Cool Industries (Pvt) Ltd Sony Corp Service Industries Ltd Bata Pakistan Ltd Others Total
Source:
2008 1.2 0.2 0.2 0.1 0.0 0.0 98.3 100.0
2009 1.2 0.2 0.2 0.1 0.0 0.0 98.3 100.0
2010 1.3 0.2 0.2 0.1 0.1 0.0 98.2 100.0
2011 1.1 0.2 0.2 0.1 0.1 0.0 98.4 100.0
2012 1.2 0.2 0.1 0.1 0.1 0.0 98.2 100.0
Table 6
Non-Grocery Retailers Brand Shares: % Value 2009-2012
% retail value rsp excl sales tax Brand Company Canteen Stores Department Waqar Electronics Waves Sony Centre Servis Bata Others Total
Source:
2009 1.2
2010 1.3 0.2 0.2 0.1 0.1 0.0 98.2 100.0
2011 1.1 0.2 0.2 0.1 0.1 0.0 98.4 100.0
2012 1.2 0.2 0.1 0.1 0.1 0.0 98.2 100.0
Waqar Traders Pvt Ltd Cool Industries (Pvt) Ltd Sony Corp Service Industries Ltd Bata Pakistan Ltd
0.2 0.2 0.1 0.0 0.0 98.3 100.0
Table 7 sites/outlets Brand
Non-Grocery Retailers Brand Shares: Outlets 2009-2012
Company Bata Pakistan Ltd Service Industries Ltd
2009 255 225 45 30 12 15 123,148 123,730
2010 260 230 48 36 14 15 124,589 125,192
2011 270 235 48 36 14 15 126,110 126,728
2012 272 237 48 36 16 15 127,702 128,326
Bata Servis Canteen Stores Department Sony Centre Waves Waqar Electronics Others Total
Source:
Sony Corp Cool Industries (Pvt) Ltd Waqar Traders Pvt Ltd
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Table 8
Forecast Sales in Non-Grocery Retailers by Channel: Value 2012-2017
PKR billion, retail value rsp excl sales tax 2012 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:
2013 465.0 79.6
2014 495.3 83.8
2015 525.3 88.9
2016 554.8 95.3
2017 584.5 101.8
443.8 76.5
43.2 16.6 120.7
43.4 17.6 122.3
44.1 18.7 125.5
45.1 19.8 129.1
46.4 20.7 132.9
48.1 20.9 134.1
27.4 145.0 873.0
29.5 148.3 905.7
32.3 153.2 952.9
35.4 158.6 1,002.1
38.9 164.8 1,053.8
43.0 171.3 1,103.8
Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
Table 9 outlets
Forecast Non-Grocery Retailers Outlets by Channel: Units 2012-2017
2012 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:
2013 91,172 1,694
2014 92,372 1,729
2015 93,672 1,769
2016 94,843 1,813
2017 95,791 1,849
90,072 1,664
9,935 1,169 15,771
10,157 1,194 16,064
10,396 1,221 16,393
10,660 1,253 16,770
10,919 1,285 17,104
11,172 1,311 17,413
95 9,620 128,326
102 9,710 130,093
110 9,810 132,031
119 9,930 134,173
128 10,039 136,131
138 10,139 137,813
Table 10
Forecast Sales in Non-Grocery Retailers by Channel: % Value Growth 20122017
% current value growth, retail value rsp excl sales tax 2012-17 CAGR 2012/17 TOTAL
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Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:
5.7 5.9 2.2 4.8 2.1 9.5 3.4 4.8
31.7 33.2 11.2 26.3 11.1 57.2 18.2 26.4
Table 11
Forecast Non-Grocery Retailers Outlets by Channel: % Unit Growth 20122017
% unit growth 2016/17 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:
2012-17 CAGR 1.2 2.1 2.4 2.3 2.0 7.8 1.1 1.4
2012/17 Total 6.3 11.1 12.5 12.1 10.4 45.3 5.4 7.4
1.0 2.0 2.3 2.0 1.8 7.8 1.0 1.2

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NON-GROCERY RETAILERS IN PAKISTAN

Euromonitor International April 2013