m

m


 

m

m
Presented by:
MIGNESH PATEL
SUMIT KUSHVAH
Retail Industry evolution
à Traditionally retailing in India can be traced to:
à The emergence of the neighborhood µkirana¶ stores
catering to the convenience of the consumers.
à Era of Government support for rural retail: Indigenous
franchise model of store chains run by khadi & village
industries commission.
à Retail in India is brought up by SHOPPER¶S stop when it
established its first customer care associates in the year
1993 and was providing a salary of Rs.900 to an
employee.
à Textile sector with companies like Bombay Dyeing,
Raymond¶s, s kumar¶s and Grasim first saw the
emergence of retail chains.
à Later TITAN successfully crated an organized retailing
concept and established a series of showrooms for its
premium watches.
à Food world, Subhiksha and Nilgiris in food and FMCG;
planet M and music world in music; cross world and
fountainhead in books.
à Post 1995 onwards saw an emergence of shopping
centers.
-mainly in urban areas, with facilities like car parking
à Emergence of hyper and super markets trying to provide
customers with 3v¶s ± value, variety, and volume.
à At year end of 2000 the size of the Indian organized retail
industry is estimated at Rs.13000 crore.
 Evolution of Indian retail
Modern Formats/
Historic/Rural Traditional/Pervasiv Government
International
Reach e Reach Supported
Exclusive Brand
Outlets
Hyper/Super Markets
Department Stores
Shopping Malls
PDS Outlets
Khadi Stores
Cooperatives

Convenience Stores
Mom and
Pop/Kiranas

Weekly Markets
Village Fairs
Melas

Source of Neighborhood Availability/ Low Shopping

Entertainment Stores/Convenience Costs / Experience/Efficiency
Distribution
Retail industry in India
à The Indian retail industry is the fifth largest in the world.
à Comprising of organized and unorganized sectors, India
retail industry is one of the fastest growing industries in
India, especially over the last few year.
à The Indian retail industry is expected to grow from
Rs.35000 crore in 2004-o5 to 109000 crore by the year
2010.
à The Indian retail market, which is the fifth largest retail
destination globally, has been ranked as the most
attractive.
à Retail is India's largest industry, accounting for over 10
per cent of the country's GDP and around eight per cent
of the employment
à The retail sector is expected to contribute to 22 percent
of India¶s GDP by 2010.
Key player in Indian retail sector
à [ t re gro

ntoons
à A.V.Bir Gro

à eince
à K ej cor
. Gro

à Lndmrk Gro

à Trent
6
ILING FO6
 IN India
à Ms

à S
ecity Stores

à Disco nt Stores

à De
rtment Stores

à Hy
ermrts/S
ermrkets

à Convenience Stores

à MBOǯs
O6GNI  6
IL 6K
IN
India (6s. Cr.)
Food & grocery Retail
in India
Food & grocery in India
à Food and grocery is second largest segment of the retail
industry and the potential for new entrants in this
segment is enormous , particularly in untapped markets
like rural and semi-rural areas.
à Growing at the rate of 30% the Indian food retail is going
to be the major driving force for the retail industry.
à The food and grocery market in India is currently valued
at $236 billion, making it the sixth largest grocery market
in the world.
à It is ex
ected to grow to $482 biion in 2020 wit n
over growt rte of 104
er cent.
à Food and grocery currently contributes to around 70 per
cent of the total retail sales
à The unorganized segment still constitutes 99 per cent of
the total food and grocery market, and is characterized
by the traditional mom-and-pop kirana stores.
à The modern formats account for just 1 per cent of the
total food and grocery market and are characterized by
cash and carry stores, hypermarkets, supermarkets,
discount supermarkets and convenience stores.
à Some important expectations of customers shopping at
modern formats are staff politeness, freshness of stock
and the availability of latest brands
  6
   

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 O FC
 OU
FOO 6
ILING IN
India
 [ood etiing is growing t 30% rte wic mkes it  mjor
driving force of te economy.
 At US$ 175 biion tody te food ind stry is ikey to grow to
US$ 400 biion by 2025.
 Modern stte of te food retiing is not  demnd ed b t te
s

y ed one.
 [ood s te rgest cons m
tion in te Indin economy nd
wi remin te singe rgest ctegory.
 Tere re 10 miion street vendors in Indi of wic 6 miion
ony se food.
 Indin cons mers re 

y wit store goods tn brnded
goods.
FC
O6 PING
 W
O
6 OLU
IONIZING FOO 6
ILING IN INI

à Cnging ife styes nd tstes

à Growing need for convenience
à Incresing dis
osbe income
à Incresing n mbers of working women
à Cnge in cons m
tion
tterns
à Higer s
irtions mong yo t
à Im
ct of western ifestye
à Pstic evo tion Ȃ Incresed se of credit crds nd
debit crds

ol
ing consumer preferences !
Indin cons mers re evoving
[rom trdition toǥ

ǥ modernized trdition
 [rom gobize toǥ

ǥ indinise
 [rom f nction toǥ

ǥ ifestye
17

ol
ing consumer preferences !
Indin cons mers re evovingǥ
 [rom v e for money toǥ

ǥ v e for time nd convenience

 [rom c tio s toǥ

ǥ ex
erimenttion
 [rom over-te-co nter toǥ

ǥ to c-nd-fee
18
UP-N-COING FOO 6
IL
FO6

à w

 
In Indi bo t 90% of food
rcses re mde witin 
distnce of 1.5 km from te c stomer's ome. Te o tets
cosest to  neigbo rood store in Indi re 'Sf' o tets
o
erted by Moter Diry in Dei Mrgin [ree in Ker nd
S biks.
à
  
Tis formt cters to te cons mers' need for coice nd
vriety. Tese stores cter to te cons mers in  ctcment
re wit  rdi s of 3 to 4 km. Exm
es of s
ermrkets
redy in Indi re [ood Word Trinetr nd Nigiris.
 Ô m
  

m

m
à    Hy
ermrkets re essentiy destintion
stores ctering to te cons mers' b k so

ing needs in bot
food nd non-food ctegories. S
encerǯs (PG) Big Bzr
(Pntoons) Str Indi Bzr.

à      
  Tese stores se teir
rod cts
to teir members ony. Te members re ty
icy retiers nd
instit tions. Te key dded v e is  wide rnge of
rod cts
nder one roof vibe t woese
rices. Metro s strted
te first C & C store in Indi in Bngore. Te ty
ic re of 
C & C store is 70000 to 100000 sq. ft.
X[ood eti [ormtdz s  reti offering tt cn be
segmented bsed on te different v e tt it offers to
te cons mer ong tree key dimensions Ȃ Coice
Service nd Price.

6 O 6N FOO 6
IL FO6

 Hy
ermrkets:
- Sef service stores mix of food & non food.
- Essentiy ow
rice
- 40000Ȃ 75000 Size (sq.ft)
 S
ermrkets:
- [ood  ndry nd o seod mintennce
rod cts.
- Sef service
- ow cost
 Convenience stores:
- Mix of
rod cts
- 500-1000 (sq.ft)
Food is the largest segment in
6etail !

So rce: KPMG

So rce: Ernst & Yo ng

 At 77 % [ood & Grocery is te

rgest segment in eti ses

23
OPPO6
UNI
I  FO6 N W FOO 6
IL
FO6


1. Limited-nge Disco nt Stores

2. Mini-Mrts

3. Com
ct Hy
ermrkets

4. S
ecity [ood Stores

5. Convenience P s
LII
-6NG ICOUN

O6 
à Sm

à Esy-to-so

à Esy-to-ccess config rtions

à Low-
riced
INI-6

à ow-
riced neigborood stores

à Limited rnge of fres food

à Dry groceries nd o seod
rod cts

COPC
 P 66K

à Sm in size tn y
ermrkets

à ed ced rnge nd ssortment

à Brings togeter te strengts of bot y
ermrkets

nd s
ermrkets
P CIL
FOO 
O6 
à Lrge
rod ce sections

à Are between 200 nd 500 sq re metres

CON NI NC PLU
à Neigborood so
s

à Stnd to do we in mrkets wit b sier ifestyes nd

n geing
o
tion
O6GNIZ  FOO 6
IL CIN
suppliers retail chain
â New gric t re s

y cin
is emerging Indi removing
non-v e dding
intermediries

â Prtnersi
wit v e dding

intermediries of te s

y
cin

à Tecnoogy trnsfer
à Stremine
rocesses
à Mintin Q ity

32
  
 

ð
     

 
  
 



  
 
   
    
 

  
  
   

  
 
 
    
 
  
  
 
     

   
 
 
 
   
   
  

     


 Strategies of Food
retailing markets
ð  
 


 
 
  
 
 

 

  !  w  


" 

# 
 
  

  

$
      
   
K PL 6 IN Indian FOO 6
IL
 C
O6
à eince fres
à S biks
à [ood bzr
à More reti
à [ood word
à Metro AG
à MT
à Nigiris
 6 LINC
F6 

Type Supermarket

Founded 30 October 2006

Headquarters Mumbai, India

e eo le Muke mbani, O
à eince [res is te convenience store formt
à Heded by MUKESH AMBANI.
à eince
ns to invest in excess of s 25000 crores in te
next 4 yers in teir reti division.
à Te com
ny redy s in excess of 560 reince fres
o tets cross te co ntry.
à eince [res store is 

roximtey 3000-4000 sq re.
feet nd cters to  ctcment re of 1-2 km.
 IION
To crete  bend of  ty
ic Indin Bzr
ndInterntion S
ermrket tmos
ere wit
teobjective of giving te c stomer  te dvntges
ofQ ity nge nd Price ssocited wit rge formt
stores nd so te comfort of being be to to c ndfee
te
rod cts.
 UIK
Type Discount department
store
Founded Chennai, India
(1997)
No. of locations 1000 stores
Key people R. Subramanian
Industry Retail
Employees 25,000
à

 is n Indin reti cin wit more tn
1400 o tets
à seing groceries fr its vegetbes medicines nd
mobie
ones.
à It ws strted nd is mnged by
. S brmnin
à S biks
ns to o
en 1000 o tets by December
2008.
à
ns to invest s.500 crore to increse te n mber of
o tets to 2000 cross te co ntry by 2009
à


%
à Bringing in  mode tt is Indin c
be of
s

orting te midde css of Indi.

à A b siness mode from Indi is s
erior to  b siness

mode im
orted from te West.

à We gen iney beieve tt tro g efficiency we re

e
ing te cons mers sve more.
 FOO Z6
à [ood Bzr te s
ermrket vrint of
f t re gro
.
à Hs do
ted te 'negotited nd
redetermined'
mode to so rce vegetbes nd fr it from frmers
cross sttes.
à Te com
ny wi se te mode to
roc re
ottoes
from frmers in Uttr Prdes were te q ntity nd
q ity of te
rod ce is
redetermined. Te com
ny
decides te
rice fter te rvest to give mxim m
benefit to te frmer.
 35+ stores;
n Indin formt B bneswr Ng
r
Nsik D rg
rǥ.Sngi
 Sim
e Indin mode
 Minim m bit cnge for te c stomers
 Use sm entre
rene rs to te it for ctegory
mngement
 Lrgest [ood etier Ȃ B t j st  sm s
ec in te
mrket
 Sooting for s 1000 Cr tis yer; s 2000 Cr next yer
à Kisore Biyni-r n reti mjor Pntoon is witing
mendments in te Agric t re Prod ce Mrketing
Committee (APMC) Act in different sttes to so rce its

rod ce directy from te frmers.

à Te foor re for te stores wi rnge from 5000 sqft
to 20000 sqft.
O6 6
IL 
O6
Type Department store

Founded 2007

No. of locations 40-50(Mumbai)

Industr etail
 O6
 OU
à Te MOE cin of s
ermrkets re brigt nd cen
stores t convenient octions wit yo ts tt ow ese
of nvigtion.

à MOE is te nswer to te so

ing needs of te Indin

o sewife wo wnts  modern nd convenient o
tion in
er neigbo rood.
à a & so s  rnge of
rod cts from its own stbe
vibe cross v e
remi m nd seect rnges.

à Te s 9000-crore
n-Indin
n wo d ve

neigbo rood s
ermrkets ctering to diy nd
weeky o seod so

ing needs of c stomers.
Food World
à Wit 89 stores in Cenni (30 stores) Bngore
(27 stores) Hyderbd (17 stores) nd P ne (7
stores) two stnd one stores in Coimbtore nd
Mysore.
à Mercndise is divided into six ctegories fres
food dry groceries
rocessed nd cnned foods
o seod cening et nd be ty nd gener
mercndising.
à [oow tigt inventory ens re q ity nd restricts
mrgins to te minim m for stbes.
à Ec store em
oys bo t 16 we trined
ersons
nd te mn to women rtio of 1:5.
52
 
6
à Prod ces  wide rnge of food
rod cts tt ve  good
demnd bot witin nd in US E ro
e nd G f
co ntries.
à Leders in redy mix redy to et nd s
ices.
à Mintins very ig q ity stndrds rigt from

roc rement to se.
à Tey ve HACCP certificte nd it is n ISO 9002
com
ny.
à Tey
roc re te rw ingredients from
ces tt re
re
ted for its
rod ction nd
rocess te sme in teir

nt in Bngore.
à Mde  beginning in retiing tro g  cin of XNmm
MTdz stores.

53
Nilgiris
à Bngore bsed cin strted s  diry in 1904
ving 50 frncisee reti o tets.
à O
erted s  store for decdes ti te mid 1990ǯs
sw o

ort nity in retiing nd ex
nded  over
so t Indi.
à Hve  different strtegy in tt s  stress on
convenience nd
romoting its own brnd. It cters
to te needs of iger income brcket.

55
etro G
à O
ened its first Indin o tet in Yeswnt
r
Bngore on  s
rwing 6500 sq re metres re.
à Pro
osed to o
en one more centre in Bngore
d ring November 2003.
à C
it ex
endit re for tese two centres is s.176
crores (35 miion e ros).
à Em
oy 300 oc
eo
e nd ed q rter wi
em
oy 750 oc
eo
e.

56
K UCC  FC
O6
FO6 FOO 6
ILING
' Õ 
     

à Eigt to ten o tets to
rcse vrio s food
rod cts
à Time-cons ming nd inefficient wy of so

ing for
food
à Cnging ifestye
à ǮV e for time' nd ǮV e for money'
' !


  '
  
  
à In te 1990s cost of re estte ws ig nd ence food
reti b siness modes were not finnciy vibe in
metro
oitn res
à In te st few yers vrio s fctors ve ed to
incresed vibiity of re estte for orgnized reti
formts
à 300 ms re t vrio s stges of constr ction cross
metros nd mini metros in te co ntry
à Te verge size of  m is bo t 100000 sq ft
à Addition reti s
ce of 30 to 40 miion sq. ft. over te
next tree to five yers
'

 Õ   
  (!
 


   
 
à Te Indin government s  nced v e dded tx
(VAT) ntionwide A
ri 2005

à Aim ws to: boost stte reven es red ce inter-stte

brriers to trde nd mke cco nting more
trns
rent

à Tis ws in fvo r of orgnized retiers given teir

m ti- oction
resence
' Õ 
   
  
 Sre of
rivte bes in te bsket of key food
retiers is incresing

 [ierce com
etition wit te we-estbised brnds of

te eding [MCG com
nies

 Trent (A Tt Gro
Com
ny) s now  nced 

y
ermrket wit foc s on Str Indi Bzr nd im
to cieve  significnt sre of se tro g
rivte
bes.
K CLL NG  IN FOO
6
ILING
'    ) %  

 
 Dietry
tterns
oor eectricity s

y ow

enetrtion of refrigertors nd  fmiy str ct re

 V e conscio s

 A TSMG st dy indictes tt
ckged food
yers

need to drive down
rices by most 35-40% to be
com
rbe on cost wit ome mde food
' 
 
         
à M ti
e c t res ng ges nd reigions

à Preferences of te Indin cons mer.

à A cenge for
yers s
iring to deveo

n

Indin
resence.
' 

    

'

   



'    


  

 ents cco nt for 7-7.5%
 e estte vibiity nd costs
 [ctors ike deq te
rking mbience nd
roximity
te key drivers of footfs

' a   




FU
U6 OF FOO 6
ILING
' Õ
   
 
 by trgeting s
ecific c stomer segments nd serving
teir needs better e.g. working women singe office
goers etc

 by cnging te
rod ct mix e.g. entirey
rivte be

stores exc sivey fres
rod ce stores

 by offering new forms of convenience nd wider rnge

to te c stomer e.g. tee reti nd internet reti
'

 Õ

à Sef-scn cecko ts

à Using [ID tgs

à Web-enbed POS systems e-SCM systems e-

Proc rement systems nd wreo se mngement
systems

à Use of c tting edge nytics

Online Grocery 6etailing
Worldwide
à Cons mers re incresing teir s
end on groceries onine.

à Mrket is more deveo
ed nd diversified in E ro
e (nd

rtic ry te UK) tn te US.

à US mrket is food foc sed (53% of tot onine ses

com
red to 43% in E ro
e).
Why Online Groceries
à Convenience Ȃ No trffic no q e es

à Time Sving nd esy so

ing

à 24*7 so

ing

à Better
rices s next so
is  cick wy

à Better com
rison of
rod cts nd
rices

Online 6etailing in India
à UKǯs onine reti ind stry - $15 biion

à Indiǯs onine reti ind stry - $ 0.23 biion

à Indin onine retiing growt - 30% (yer on yer)

à Indi
oised to ve tird rgest net sers by 2013

Online Grocery 6etailing in India
à [i re of Sngmdirect.com (strted by HUL ten
nded over to Wdwn Gro
)

à Com
etition wit oc Kirn Stores s we s wit

Modern S
ermrkets & Hy
ermrkets

à A few websites (mosty in So t Indi) Ȃ b t not

rofession

à S

y cin nd ogistics Ȃ te mjor concern

 Groceryshop.inʹ
he Online
upermarket

à U.V. eti - Indiǯs first
rofession onine grocery

retier wit www.groceryso
.in website

à Strted in Powi Anderi res of M mbi ex
nding

in entire M mbi Nvi M mbi nd Tne very fst.

à C
t ring Bngore Dei NC P ne Hyderbd

Cenni & Amdbd mrkets in 2010 ony
d
antages of Groceryshop.in
à Better c stomer services

à Deivery in 6 o rs wit 2 sots of 9:00m nd 3:00
m

à Strong eti nd Web Anytics

à Lrge n mber of SKUs nd good offers

Go
ernment Policy on FI in
retailing
à [DI in retiing in not owed
er sy foreign
retiers cn o
erte in Indi tro g
à oint vent res were te Indin
rtner is 
ex
ort o se (s c s Tot Het Cre)
à [rncising/Loc mn fct ring/So rcing
from sm-sce sector (for exm
e
McDondǯs)
à Cs nd crry o
ertions (for exm
e
Gint in Hyderbd)
à Te McKinsey re
ort sttes [DI wi e
te reti
b sinesses to grow from te
resent $180 biion to
$460-470 biion by 2010.
73
 International retailers in India: Strategies
> Franchise
> International company gives name and
technology to local partner. Gets royalty in
return
> In case master franchise is appointed for

How they are region or country, he has right to appoint

present 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 are > Also set up franchised outlets for brand

present >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 increased
sourcing by major players
Benefits of > Sourcing by Wal-Mart from China improved
FDI 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
> Better operations in production cycle and
Benefits of distribution
FDI > 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

> Mature Phase: 100% FDI 2 yrs

How FDI ?
> 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
 Go
ernment policies impeding
growth of supermarkets & retail
food chains
à [DI is not owed in retiing- sowing te growt
rocess of
orgnised retiing in Indi.
à Growt of s
ermrkets in most deveo
ing co ntries (Brzi
Cinetc.) s tken off in 1990s fter [DI ws owed in tis
sector.
à etiing is not regrded s n ind stry very few bnks re
wiing to invest in tis sector.
à Sortge of wreo sing fciities cod storge nd rge
sce
rocessing nits.
à S

y cin is frgmented & mrked by existence of rge
no. of intermediries
à APMC Act s fied to cieve te desired objective of
im
roving conditions of te frmers
79
 Go
ernment policies impeding
growth of supermarkets & retail
food chains
Ö

à Indi is sti in te second nd tird
rty ogistic

rovider mode wie fo rt
rty ogistic modes ve
become gob stndrds for ogistic
roviders.
à etiing is s bject to
etor of ws nd reg tions
t centr stte nd m nici
/oc eve
à estrictive zoning egistion imits vibiity of nd
for reti/ commerci
r
oses
à estrictions on interstte movement of food grins
de
rive frmers from getting rem nertive
rices.
à estrictive Lbo r ws

80