DEVELOPMENT OF INDIAN

RETAIL MARKET
 A PRESENTATION BY


MAYANK SHARMA
RETAILING
vAccording to Kotler: “Retailing includes all the activities
involved in selling goods or services to the final
consumers for personal, non business use”.

vThe Indian retail is dotted by traditionally market place

called bazaars or haats comprises of numerous small
and large shops, selling different or similar
merchandise .

INDUSTRY HISTORY
 Traditionally retailing in India can be traced to
 The emergence of the neighborhood ‘Kirana’
stores catering to the convenience of the
consumers
 Era of government support for rural retail:
Indigenous franchise model of store chains
run by Khadi & Village Industries
Commission
 1980s experienced slow change as India began to
open up economy.
 Textiles sector with companies like Bombay
Dyeing, Raymond's, S Kumar's and Grasim first
saw the emergence of retail chains
 Later Titan successfully created an organized
retailing concept and established a series of
showrooms for its premium watches
CONTINUED…
 The latter half of the 1990ssaw a fresh
wave of entrants with a shift from
Manufactures to Pure Retailers.

 For e.g. Food World, Subhiksha and
Nilgiris in food and FMCG; Planet M
and Music World in music; Crossword
and Fountainhead in books.

 Post 1995 onwards saw an emergence
of shopping centers,
 mainly in urban areas, with facilities like car
parking
 targeted to provide a complete destination
experience for all segments of society

INDUSTRY IN PRESENT
 The India Retail Industry is the largest among
all the industries, accounting for over 12 per
cent of the country’s GDP and around 8 per
cent of the employment. The Retail Industry
in India has come forth as one of the most
dynamic and fast paced industries with
several players entering the market. But all
of them have not yet tasted success
because of the heavy initial investments
that are required to break even with other
companies and compete with them. The
India Retail Industry is gradually inching its
way towards becoming the next boom
industry.
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

Some of the Key Players in Organized
Retail
.

 Retailing formats in India
.
Malls:
lHypermarts/Supermarkets:
The largest form of organized retailing today. Located 
mainly in metro cities, in proximity to urban outskirts. Ranges from  Large self service outlets, catering to 
60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping  varied shopper needs are termed as Supermarkets. 
experience with an amalgamation of product, service and  These are located in or near residential high streets. 
entertainment, all under a common roof.Examples include  These stores today contribute to 30% of all food & 
Shoppers Stop, Piramyd, Pantaloon.  grocery organized retail sales. Super Markets can 
further be classified in to mini supermarkets 
typically 1,000 sq ft to 2,000 sq ft and large 
lSpecialty Stores: supermarkets ranging from of 3,500 sq ft to 5,000 sq 
Chains such as the Bangalore based Kids Kemp, the  ft. having a strong focus on food & grocery and 
personal sales.
Mumbai books retailer Crossword, RPG's Music World and the  lConvenience Stores:
Times Group's music chain Planet M, are focusing on specific  These are relatively small stores 400­2,000 
market segments and have established themselves strongly in  sq. feet located near residential areas. They stock a 
their sectors. limited range of high­turnover convenience products 
and are usually open for extended periods during the 
lDiscount Stores: day, seven days a week. Prices are slightly higher 
due to the convenience premium.
As the name suggests, discount stores or factory outlets, 
offer discounts on the MRP through selling in bulk reaching 
lMBO’s :
economies of scale or excess stock left over at the season. The product 
Multi Brand outlets, also known as 
category can range from a variety of perishable/ non perishable goods Category Killers, offer several brands across a single 
product
lDepartment Stores:
category. These usually do well in busy 
Departmental Stores are expected to take over the  market places and Metros.
apparel business from exclusive brand showrooms. Among these, 
the biggest success is K Raheja's Shoppers Stop, which started in 
Mumbai and now has more than seven large stores (over 30,000 
sq. ft) across India and even has its own in store brand for clothes 
called Stop!.
Recent Trends
 Retailing in India is
witnessing a huge
revamping exercise as
can be seen in the
graph
 India is rated the fifth
most attractive
emerging retail market:
a potential goldmine.
 Estimated to be US$ 200
billion, of which
organized retailing (i.e.
modern trade) makes
up 3 percent or US$ 6.4
billion
 As per a report by KPMG
the annual growth of
department stores is
estimated at 24%
 Ranked second in a
Global Retail
Development Index of
30 developing countries
drawn up by AT
Kearney.

Recent Trends contd.
 Multiple drivers leading to a consumption boom:
 Favorable demographics
 Growth in income
 Increasing population of women
 Raising aspirations : Value added goods sales
 Food and apparel retailing key drivers of growth
 Organized retailing in India has been largely an urban
phenomenon with affluent classes and growing
number of double-income households.
 More successful in cities in the south and west of India.
Reasons range from differences in consumer buying
behavior to cost of real estate and taxation laws.
 Continued…..
e  o ppo rtunity fo r re taile rs re fle c te d in the  share  o f the  rural marke t ac ro
ro ug h its e ­Cho upal and Cho upal Sag ar – rural hype rmarke ts. 
ve  – le ve raging wo me n se lf­he lp g ro ups – to  explo re  the  rural marke t.
and ne two rk marke ting  c o nc e pts to  ac t as an aggre gato r and se rve  the  
 re taile rs ranging fro m Amazo n.c o m to  e Bay to  radic ally c hange  buying 
lt. 
po rtal o r tie ­sups with ho rizo ntal playe rs like  Re diff.c o m and Indiatime s.c
Major Retailers
 India’s top retailers are largely
lifestyle, clothing and apparel
stores
 This is followed by grocery stores
 Following the past trends and
business models in the west retail
giants such as Pantaloon,
Shoppers’ Stop and Lifestyle are
likely to target metros and small
cities almost doubling their current
number of stores
 These Walmart wannabes have the
economy of scale to be low –
medium cost retailers pocketing
narrow margin

Top 10 retailers…..
 Pantaloon Retail
 K.Raheja Group Retail

 Tata Group

 RPG Group

 Landmark group

 Piramal group

 Subhiksha

 Bharti-Walmart

 Relaince

 A.V.Birla group
India vs. World
 Indian retail is fragmented with over 12 million outlets
operating in the country. This is in comparison to 0.9
million outlets in USA, catering to more than 13 times
of the total retail market size as compared to India
 India has the highest number of outlets per capita in
the world - widely spread retail network but with the
lowest per capita retail space (@ 2 sq. ft. per person)
 Annual turnover of Wal-Mart (Sales were $219 billion) is
higher than the size of Indian retail industry. Almost
100 times more than the turnover of HLL (India's
largest FMCG company).
 Wal-Mart - over 4,800 stores (over 47 million square
meters) where as none of India's large format store
(Shoppers' Stop, Westside, Lifestyle) can compare.
 The sales per hour of $22 million are incomparable to
any retailer in the world. Number of employees in
Wal-Mart are about 1.3 million where as the entire
Indian retail industry employs about three million
people.
India vs. World continued……
 One-day sales record at Wal-Mart $1.25 billion -
roughly two third of HLL's annual turnover.
 Developed economies like the U.S. employ
between 10 and 11 percent of their workforce in
retailing (against 7 percent employed in India
today).
 60% of retailers in India feel that the multiple
format approach will be successful here whereas
in US 34 of the fastest-growing 50 retailers have
just one format
 Inventory turns ratio: measures efficiency of
operations. The U.S. retail sector has an average
inventory turns ratio of about 18. Many Indian
retailers KPMG surveyed have inventory turns
levels between 4 and 10.
 Global best-practice retailers can achieve more
than 95 percent availability of all SKUs on the
retail shelves (translating into a stock-out level
of less than 5 %).The stock-out levels among
Indian retailers surveyed ranged from 5 to 15
percent
Share of organized & unorganized retail
with comparison

PAKISTAN 1 99

INDIA 3 97

CHINA 20 80

INDONESIA 30 70

BRAZIL 36 64 ORGANISED

40 60 UNORGANISED
THAILAND

MALASIA 55 45

TAIWAN 81 19

USA 85 15

0% 20% 40% 60% 80% 100%

 Future direction: Positives
 AT Kearney has estimated India’s total retail market at US$ 202.6
billion which is expected to grow at a compounded 30 per cent over
the next five years.
 With the organised retail segment growing at the rate of 25-30 per
cent per annum, revenues from the sector are expected to triple
from the current US$ 7.7 billion to US$ 24 billion by 2010.
 The share of modern retail is likely to grow from its current 2 per cent
to 15-20 percent over the next decade
 Over next two years India will see several Indian retail businesses
attaining a critical mass as growth in the industry picks up
momentum driven by two key factors:
 Availability of quality real estate and mall management
practices
 Consumer preference for shopping in new environments
 Wal-Mart : huge plans for India. Moving a senior official from its
headquarters in Bentonville, Arkansas, to head its market research
and business development functions pertaining to its retail plans in
India.
 New York-based high-end fashion retailer Saks Fifth Avenue has tied
up with realty major DLF Properties to set up shop in a mall in New
Delhi.
 Tommy Hilfiger, retailer of apparels, expects to open one store each in
Delhi, Ahmedabad, Lucknow and Bangalore in the next four
months.
 Future direction: Concerns
 68 million square feet of mall space is expected to be available by
end of 2007, which might lead to over-capacity of malls
 Lack of differentiation among the malls that are coming up. One
option may be to look at specialization.
 Poor inventory turns and stock availability measures - retailers
clearly need to augment their operations.
 Operations of retailers and suppliers are not integrated. Efficient
replenishment practices practiced in the Indian auto and auto-
component industry can be leveraged to implement efficient
supply chain management techniques.
 Supplier maturity, in terms of adherence to delivery schedules and
delivering the quantity ordered, is an issue
 Sales tax laws - lead to retailers having state-level procurement and
storage leads to Indian retailers having higher inventories. VAT
has helped alleviate this a bit.
 Increased adoption of IT and shrinkage management will be a critical
area.
 Supply chain and customer relations followed by merchandising,
facilities management and vendor development are areas which
have significant gaps and proactive training is a key imperative
for overcoming these.





Analysis of Growth
 Organized retail growing at estimated 25% .
 The Indian retail market, which is the fifth
largest retail destination globally, has been
ranked as the most attractive emerging
market for investment in the retail sector by
AT Kearney's eighth annual Global Retail
Development Index (GRDI), in 2009. The
share of retail trade in the country's gross
domestic product (GDP) was between 8–10
per cent in 2007. It is currently around 12
per cent, and is likely to reach 22 per cent
by 2010.
 E.g.: Bharti has invested 60 Billion with the
largest retail Wal-Mart (last year).

THANK YOU
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