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EMERGING

RETAIL FORMATS
IN INDIA
PAST, PRESENT & FUTURE
LBSIM, DELHI
1st Year
Rinky Sachdeva
Rohit Jain
Atul Mathur
Munish Mittal
Aditya Goel
Satyam K. Saxena

FLOW OF PRESENTATION

Introduction

Evolution of Indian retail

Emerging Trends

Research

Future Retail

Shoppers Stop

FDI in Retail- Present & Future Scope

Conclusion

Retailing includes all the activities involved in


selling goods or services directly to final
consumers for personal, non-business use
- Philip Kotler

INTRODUCTION

Indian retail industry is worth 500bn $

Indian retail sector accounts for 22% of Indias GDP

Contributes 8% to total employment

Source: Report named Retail Sector in India by Research And Markets

TYPES OF RETAIL

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 shopunlicensed.

Current retail penetration: 92%

Low technical and accounting skills required

Source: Technopak Aranca Research- 2012

EVOLUTION OF INDIAN RETAIL


Consolidation
Expansion

Conceptualisation

2010 onward
200510

199005

Initiation

Pre 1990s

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

Manufacturers
opened their
own outlets

Source: Technopak Advisors Pvt Ltd, Aranca Research

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

EMERGENCE OF ONLINE
RETAIL

India has 3rd highest number of internet users


Growing @40% per year
Present contribution of online retail: 0.5%

Source: Report by COMSCORE for ASSOCHAM- 2013

ONLINE RETAIL

Young population aided 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

Source: MasterCard worldwide insights- 2011

EMERGING RETAIL FORMATS

SPECIALTY STORES

A typical 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

DISCOUNT STORES

Offers extensive 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

HYPERMARKETS: Approx 21% 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

MALLS

Has a range 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

FUTURE GROUP: The Walmart 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

Contd

Its a flagship 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

SHOPPERS STOP: A case at


hand

Shoppers Stop Ltd., 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

INDIAN RETAIL TO BENEFIT 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

FDI POLICY DETAILS ON 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

FORMS OF FDI IN INDIAN


RETAIL

Joint Ventures

Franchising

Cash & carry operations

Non-store formats

Sourcing of supplies from small scale sector

GROWTH OPPORTUNITIES IN
INDIAN RETAIL INDUSTRY

ATTRACTIVE INVESTMENT
SEGMENTS
Retail

component 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

CONCLUSION

Emerging retail formats 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

THANK YOU!!