RETAIL SECTORS

Presented by :-
Purval, Rashmi, Sandeep, Joy
Jayesh
Retail Sector
Evolution of Retail
 Barter System was known as the first form of retail.
 As time passed currency was exchanged with goods
and services.
 Hawkers carried out the first Retailing in Push Carts
 Followed by Kirana Stores …….. Mom and Popup
Stores
 Finally Manufacturing era necessitated the small
stores and Specialty stores
 It was a seller market still than this point of time
with the limited no of brands available
 Barter chain  Single brand franchise chain 
Standalone 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 V’s i.e.

Value, Variety and Volume.
 What is Retail?

 “A retail 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

the bulk.

 Very high numbers near to neighborhood

 Reorganized by the service levels

 Retail Sector today is worth of 394 Billion Us $

 Indian Consumption

 Big PictureGDP
 2005 -06 :-PictureGDP -$700 bn :-

PFC -$220 bn (30%) Investment -$480 bn

(70%)
 2012 -13 :- PictureGDP -$1200 bn :-

 PFC -$600 bn (50%) Investment -$600

bn (50%)
 Heterogeneous country

 29 states,12 different languages, 72

festivals
 Internet era, not industrial
 Young country -60% below 30 years of
age
 Multi-format, multi-level
 Within the city, not suburbanIndian
Retail-Ground Realities
 Consumption =
Development

BETTER
CREATIVE/ INVESTMEN
INNOVATIVE T/
avenues for BUSINESS
CONSUMERS opportuniti
to want to es for our
spend their PARTNERS
money &
INVESTORS
Different products involved in Retailing

Food       
Books & Magazines
Fashion & Clothing  
Personal Care
Optical Consumer Electronics  
Sport & Leisure
Home Ware
Footwear & Leather 
Toys & Games
Jewellery & Watches
Furniture 

Petrol        
Manufactu
rers

Whole
seller

Organized Sector

Distributor

Retailer
Types of Retail Sectors
 Unorganized Retailing
 Hawkers (Kirana)
 Weekly Markets
 Organized retailing
 Convenient / Departmental stores
 Factory outlets and discounts Market
 Supermarkets
 Wholesalers market
 Company and Franchises showroom
Disadvantages Of Retail
Industry in India
 Margins are low
 High property cost
 Poor Infrastructure
 Expertise in logistics
 Couple of firms in retail sector have turn
over more than Rs 100 cr
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
Cont
….
 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
Importance
 Largest and fastest growing sector in India.

 Modern retailing forms one point stop for all

shopping.

 Consumer gets a large product variety of

brands to choose from one roof.

 First it was a sellers market and now its

changing to buyers market.

 By 2010 Indian retail sector would be

generating 10 million employment
opportunities.
Retail Sector in India
Some of the Key Players in
Organised Retail
Analysis of Growth by
ASSOCHAM
 Organized retail growing at estimated 25%

 It is expected that retail in India could be worth US$

175-200 billion by 2016.

 2008-09 Total retails contribution to GDP is between 8%

which would further jump up to nearly 12% in next few
years. By 2010, retails contribution to national GDP in
totality is likely to be 22%.

 2008 – Retail Growth rate – 25-28%, Unorganized and

organized retail size – 300 billion US$

 Opening 10 to 15 outlets by 2015, it plans to employ

about 5,000 people selling groceries, consumer goods,
fruits and vegetables. India's retail industry is worth
$300bn (£148bn)
Eg: Bharti has invested 60 Billion with the largest retail
GROWTH OF INDIAN RETAIL SECTOR

Retail Sector contribution to GDP sector is

 Elasticity of Demand for
Luxury and Necessities
3.5

2.5

2
Price

1.5

0.5

0
0 0.5 1 1.5 2 2.5 3 3.5

Demand
Government Policies
 The retail industry in India is growing at a significant pace.
However, there are several problems faced by the industry.
The major challenges for the organized sector include:

 Taxation laws that favor small retailers.

 Multi-point octroi collection.

 According to analysts, for this industry to thrive, Indian

retailers need to emulate worldwide retail practices such as
accuracy in financial reporting, increased levels of
corporate governance and greater accountability among
employees.

 Foreign Equity does not go beyond 51 percent.

 Additions to the product categories to be sold under ‘single

brand’ require fresh govt. approval.
International Retail: At a
Glance

3% 2% 9%
8% 38%

13%

27%

USA EU Japan China

India Russia Others
Share of Organized Retail
 Key Players

USA = US$ 2,350 Bn UK = US$ 406 Bn China = US$ 313 Bn

 Highly evolved US market has WalMart taking only 8%

market share
 UK market has Tesco with only 13.4% market share
 China market still does not have a clear leader
SWOT Analysis
Strength
 Increasing demand driven by the country’s
young working population

 Increase in per capita income which in turn

increases the household consumption

 Create win-win situation for all links in value

chain ( suppliers, producers, retailers and
customers).

 Improvement in the standard of living.

 Technology intensive industry

Weakness
 Lack of expertise in Supply Chain Management

 Inadequate Infrastructure

 Stringent Labor Laws

 Lack of specialized professionals in Industry

 Lack of industry status.

 Government Restrictions on FDI

 Non-Availability of Government Land.

Opportunities
 Change in consumer behavior pattern and
increase in disposable income.
 It is estimated that 15 million people would
be engaged in Retail and Retail support
activities by 2010
 Indian rural markets offer a sea of an
opportunity for the retail sector.
 Upcoming international Players
 Healthy prospect for the fashion industry.
Threats

 Indian taxation system favors small retail

business.

 Competition from unorganized Sector to the

organized Sector.

 Middle class Psychology.

 Increasing Real Estate prices

Factors which the new
entrant into retail sector
failed to verify
 For FMCG giants the proposition of their
sales through organized retail remains
small
 Failed to learn from the failures in
organized retailing like TVS group’s Stop
& Shop.
 Growth rate of small retailers.
 Trading Inefficiencies which forces the
manufactures to increase the price
Cont
….
 Small retailers can compensate this by
personalized services like credit and free
home delivery.
 Unsupportive nature of few
manufactures like not printing the bar
codes, despite this being so important
for retail logistics.
 International retailers in
India: Strategies
 Franchise
 International company gives name

and technology to local partner. Gets

royalty in return
How they  In case master franchise is
are present appointed for region or country, he
has right to appoint local franchisees
Nike, Pizza Hut, Tommy Hilfiger,

Marks and Spencer, Mango

 Manufacturing
 Company sets up Indian arm for
production
 Bata India. It also has right to

retail in India
 International retailers in
India: Strategies
 Distribution
 International company sets up local

distribution office
 Supply products to Indian retailers

to sell
How they
 Also set up franchised outlets for
are present
brand
Swarovski, Hugo Boss

 Wholesale trading
 Cash and Carry operations

 100% FDI permitted

 Metro Cash n Carry

 Why FDI?

 Improve competition
 Develop the market
 Greater level of exports due to
Benefits of increased sourcing by major players
FDI  Sourcing by Wal-Mart from China
improved multifold after FDI
permitted in China
 Similar increase in sourcing
observed for Metro in India
 Provides access to global markets

for Indian producers

 Why FDI?
 Investment in technology
 Cold storage chains solve the perennial
problem of wastage
 Greater investment in the food
processing sector technology
Benefits of  Better operations in production cycle and
FDI distribution
 Better lifestyle
 Greater level of wages paid by
international players usually
 More product variety

 Newer product categories

 Economies of scale to help lower

consumer price
 Increased purchasing capacity of
consumers
 How FDI ?
 FDI should be allowed in stages
 Initial stages: 26% FDI
2 yrs

 Establishment Phase: 49% FDI 2 yrs

How FDI ?
 Mature Phase: 100% FDI 2 yrs

 FDI policy
 No incentives needed to attract FDI

 Market size and potential are

sufficient inducers
 No need for costly tax breaks, import

duty exemptions, land and power

subsidies, and other enticements
Wal-Mart’s Productivity
Loop
 Consequences of Wal-Mart’s
Productivity Loop
Step 1: Reduce Costs
B. Squeeze suppliers
1. Extracts producer revenues
2. Relocated manufacturing overseas
3. Increase foreign debts
C. Erodes Wages and Benefits
1. Low wages in a low-wage sector
2. Working off the clock
3. Skimps on benefits, e.g., health care
 Consequences of Wal-Mart’s
Productivity Loop
Step 2: Reduce Retail Prices
B. Improves consumer living standards
1. Increases consumer purchasing power
C. Displaces existing retailers
1. Drives out small chains and independent
producers
D. Displaces existing suppliers
1. Excludes local businesses from internal Wal-Mart
supply systems
E. Triggers retail price wars
1. Pressures industry rivals to imitate its operative
behavior
2. Extends to national and global markets
Consequences of Wal-Mart’s
Productivity Loop
Step 3: Increase Sales
B. Increases efficiency of supply systems
1. Higher sales volume means greater economies of
scale
Facilitates additional consumer debt
Kishore Biyani and Big
Bazaar
 Starts with his family business in textile.
 1987 he launched frist ready-made
trousers brand- Pantaloon.
 1992 Pantaloon Fashion went public.
 Started manufacturing garments under
two more brands – John Miller and Bare.
 The business seems unviable due to high
distribution cost and margins.
 1997 – opened his first store at Kolkata.
 Cont
…
 Store did a business worth Rs 100
million.
 2001 he introduced the hypermarket
concept adapted to Indian conditions in
the form of Big Bazaar(Mumbai).
 For further expansion Biyani went for a
loan of Rs 1.2 billion.
 Was able to pull out over1,00,000 people
within 1st week of its operation.
Con
t….
 Gave the Indian customers the feel of
local market place – narrow lanes,
crowded market place and customers
bumping into each other and into
commodities.
 He understood that Indian like the
hustle-bustle of the market place, which
gives them a feeling that the goods are
sold at a lower price.
 Exploited the Economics of scale.
 Tie up with manufactures to bring down
Cont
….
 2002 Biyani started Food Bazaar within
Big Bazaar.
 Focused on “Farm To Plate“ concept in
Food Bazaar (Farm next to the store).
 Sold In House products.
 Used traditional supply chain
management.
 His principle was “KIS” Keep It Simple; ie
not making the operations complex.
 CONSUMPTION IDEAS
INVESTMENT IDEAS
 WHO? FUTURE RETAIL Everyone that
constitutes consuming India
 WHERE? FUTURE SPACES Creating
property & public retail infrastructure
everywhere in India
 WHAT? FUTURE BRANDS Identify,
mentor, invest and grow INDIA centric
brands Plan
 HOW? FUTURE CAPITAL Property,
Brands, Insurance & most importantly
easy access to money for consumers
 LINE OF BUSINESS

 HEALTH, BEAUTY & WELLNESS

FINANCIAL PRODUCTS
 FASHION

HOME
 FOOD

COMMUNICATIONS
 GENERALMERCHANDISE

LEISURE &ENTERTAINMENTL
 Pantaloon Retail (I)
Limited
Fashion
Pantaloons 25,000(sq.ft.)
Lifestyle(format)
 Central 1,25,000(sq.ft.) Lifestyle
 Big Bazaar 50,000(sq.ft.) Value
 Fashion Station 15,000(sq.ft.) Value

 FoodFood Bazaar 10,000(sq.ft.)

Lifestyle & Value
 GMBig Bazaar 50,000(sq.ft.) Value
 Books & MusicDepot 1,000-6,000(sq.ft.)
Lifestyle & Value
 Type Health, Beauty &
Wellness

Star & Sitara(Beauty Products) 1,000-

2,000(sq.ft.) Value
Star & Sitara(Beauty Salons)
2,500(sq.ft.) Value
Health Village 25,000(sq.ft.) Lifestyle &
Value
Communication :-
Gen M500-1,000 (sq.ft.) Lifestyle
M Port 1,500-2,000(sq.ft.) Lifestyle
M Bazaar 250-500(sq.ft.) Value
 Electronic Goods & Consumer Appliances
E-Zone 12,500 (sq.ft.) Lifestyle
Electronics Bazaar 3,000-6,000 (sq.ft.)
Value
Furniture, Furnishings & Accents Collection
I10,000 (sq.ft.) Lifestyle
Furniture Bazaar3,000-6,000 (sq.ft.)
Value
Home Improvement Home Town1,25,000
(sq.ft.) Lifestyle & Value
 Restaurants, Leisure & Entertainment
Blue Foods (50:50) --Fine Dining Restaurants
 Galaxy Entertainment (15.73 % stake)

 Bowling Company 30,000Lifestyle

 F123-Arcade & Games 7,000-20,000

Lifestyle
 Sports Bar 2,500 Lifestyle

 Chamosa 100 Value

 Footwear Retailing –Foot Mart Retail (I)

 LimitedLiberty Shoes (51:49)Shoe Factory

6,000-15,000 Value
 Fashion & SportswearPlanet
Retail (49:51)Lifestyle
 KidswearRetailing

GJ Future Fashions Limited (50:50)

Gini& Jony1,500-5,000Lifestyle
 Health, Beauty & Wellness :-

ManipalHealth Systems ManipalCure &

Care (50:50)Lifestyle & Value
Talwarkar’s(50:50)
 ONLINE RETAIL
 Leveraging Future Group’s presence
across 70% of customer’s wallet.
 Objective is to create the experience of
26thJanuary on the
net.Futurebazaar.comto focus on deals,
gifting and trust.
 Beta testing underway
 Subsidiary
 •73% HSRIL (Home)
 •74% FCH (Capital)
 •100% F/Media (OOH)
 •100% F/Bazaar (E-Tailing)
 •100% F/Logistics (SCM)
 •100% PFP (Sourcing)
 •100% Pantaloon Food Solutions (F&B)
 Joint Ventures
 •49% Planet Retail
 •51% Liberty
 •50% GiniJony
 •50% Blue Foods
 •50% Talwalkar
 •50% Manipal
 •50% CapitalLand(REIT & MM)
 •50% Alpha GroupConsolidated
Conclusion
 Huge Scope for Development

 Competitive Market

 Organized retail is fast growing at a rate

of 30% YOY

 Greater opportunity for employment

Recession Strategy
 Offering more & more special discounts.

 The Great Indian Shopping Festival.