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Indian and Global Retailing

INTRODUCTION TO RETAILING
Retailing consists of the sale of goods or merchandise for personal or household consumption from a fixed location such as a shopping mall or store In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells individual items or small quantities to the general public or end-user customers, usually in a shop, also called a store. Retailers are at the end of the supply chain. Marketers see retailing as part of their overall distribution strategy.

Global Retailing Facts


Worlds largest private industry Above US $ 8 trillion sales worldwide annually Accounts for almost 12% of GDP in most countries, Indias 15% GDP is from this sector About Other Countries16% 15% 7% in US in Brazil in China

Generates competition which results in reduction of prices product and service innovation enhanced customer experience Major driver for real estate and urban development

Biggest retail Sales countries of the world


U.S E.U JAPAN CHINA U.K INDIA RUSSIA U.S $ 4 tn (13 times of Indian market) U.S $ 2 tn U.S $ 1 tn U.S $ 750 bn U.S $ 444 bn U.S $ 300 bn U.S $ 200 bn

World`s largest Malls


Berjaya Times Square in Kuala Lumpur, Malaysia, is 700,000 m. (approximately 7 million square feet). Beijing's Golden Resources Shopping Mall, opened in October 2004, is the 600,000 m (approximately 6 million square feet). SM Mall of Asia in the Philippines, opened in May 2006, is the world's third largest at 386,000 m square meters of gross floor area with further expansions still ongoing. The Mall of Arabia inside Dubailand in Dubai, United Arab Emirates, which will open in 2008, will become the largest mall in the world, at 929,000 square meters (10 million sq. feet).(22000 small shops of avg 50 sq.yds in india)

Biggest retailers of the World


U.S.A FRANCE U.S.A U.K U.S.A US $316 Bn US $95 Bn US $73 Bn US $62 Bn US$56 Bn

Barter system

Weekly market Village melas

Kirana Stores Conveni ence store

Government Stores PDS

Super markets Hyper markets Malls Brand outlets

Evolution of Indian retail




Informal retailing Sector (unorganized)  Typically small retailers.  Evasion of taxes  Difficulty in enforcing tax collection mechanisms  No monitoring of labor laws Formal Retailing Sector (organized)  Typically large retailers  Greater enforcement of taxation mechanisms  High level of labor usage monitoring

Classifying Retail
 

Modern Format retailers  Supermarkets (Subhiksha)  Hypermarkets (Big Bazaar)  Department Stores (Shoppers Stop) Cash & carry (wal-mart yet to come)  Company Owned Company Operated (Bata) Traditional Format Retailers  Traditional Mom and Pop Stores: (KIRANA)  Kiosks  Street Markets  Exclusive /Multiple Brand Outlets

PRESENT CONDITION OF TRADERS


Fringe Benefit Tax
LICENCES & PERMITS INDUSTRIAL DISPUTE ACT SHOP & ESTABLISHMENT ACT COSUMER PROTECTION ACT WEIGHT & MEASUREMENT ACT PACKAGING ACT PREVENTION OF FOOD ADULTRATION ACT

VAT
INEFFICIENT LABOURS
PREVENTION OF BLOCK MARKETING ACT ANTI HOARDING & PROFEELING ACT MONEY LENDING ACT PRODEND FUND ACT MINIMUM WAGES ACT ESI ACT GRATUITY ACT BONUS ACT

ENTRY TAX FDI in Retail Trade


SERVICE TAX

ANTI SOCAL ELEMENTS WATER TAX

OCTROI

CENTRAL EXCISE

POLITICIAL INTERFERANCE PURCHASE TAX


POOR MARKET CONDITION

SALES TAX
POWER PROBLEM

INCOME TAX

INSPECTOR RAJ

STAMP DUTY WELTH TAX HIGH BANK CHARGES PROFESSIONAL TAX

Cash Transaction Tax & Quarterly C Form

New Naka Complex

Presented By Mr. B.C.Bhartia,Nagpur.

ESSENTIAL COMMODITIES ACT

FDI : India Background


  

In 1990 the total FDI was $1 Billion. 2nd Most attractive place for FDI after China. The sectors which attracted higher inflows were :
1. 2. 3. 4.

Services Telecommunication Construction activities Computer software & hardware

Recession affects - FDI in 2010 was $24.2 billion, a significant decrease from both 2008 and 2009. WalMart has termed Indias decision to allow 51% FDI in multi-brand retail as a first important step.

FDI : Indian Scenario




Retailing in India is one of the pillars of its economy and accounts for about 15% of its GDP. Indian retail market is estimated to be US$ 450 billion. One of the top five retail markets in the world by economic value. Organized retail composed to 4% Unorganized retail composed to 96 % FDI investments
1. 2.

 

  

Single Brand Outlets 51% Multi-brand Outlet 100 %

FDI in Indian retailing




Current Indian FDI Regime  FDI not permitted in retail trade sector, except in: Hi-Tech items / items requiring specialized after sales service  Medical and diagnostic items  Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator)

FDI in Indian retailing


No FDI is allowed in multiple brand retailing 100% FDI allowed in cash & carry format(e.g Walmart-Bharti) 51% FDI allowed in single brand retailing(Nike,Gucci,Versace,Mcdonal d)

Why Global Retailers are Interested in India?


    

Strategic Location & Geography Versatile Demographics Vast growing economy Retailing: The Emerging Revolution Indian retailing: opportunities unexplored

Arguments in favour of FDI


 

  

The global retailers have advanced management Entry of large low-cost retailers and adoption of integrated supply chain management The quality of product, shopping experience Promote the linkage of local suppliers, farmers and manufacturers The investment and employment

INDIA : MY COUNTRY

DONT SEE INDIA AS POPULATION OF ONE HUNDRED CRORE MOUTHS TO FEED. SEE IT AS A MARKET OF ONE HUNDRED CRORE CONSUMERS WITH TWO HUNDRED CRORE EYES TO WATCH YOUR PRODUCTS AND TWO HUINDRED CRORES HANDS TO BUY YOUR PRODUCTS.

Effect on GDP
Retail sector is expected to boost up by 25% in the next 5 years Increase in disposable income of consumer will result in demand of better products and services.

The contribution of FDI will rise to 15% in coming years Retail sector constitutes to 15% of GDP Percentage of FDI in Indian GDP is 2%

Reason For Success of Global Retailers


Better Consumer Demand Better Consumer Confidence Computer Operated Depots Better Logistical System

Large Indian retailers




Hypermarket
   

Big Bazaar Giants Shoprite Star Lifestyle Pantaloons Piramyds Shoppers Stop Trent Fame Adlabs Fun Republic Inox PVR

Department store
    

Entertainment
   

The changing Indian consumer




Greater per capita income  Increase in disposable income of middle class households  20.9%* growth in real disposable income in 99-03. Growing high and middle income population  Growing at a pace of over 10%* per annum over last decade Affordability growth  Falling interest rates  Easier consumer credit  Greater variety and quality at all price points

From Euromonitor Retail Survey

The changing Indian consumer




The urban consumer  Getting exposed to international lifestyles  Inclined to acquiring asset  More discerning and demanding than ever No longer need-based shopping  Shopping is a family experience Changing Mindset  Increasing tendency to spend  Post Liberalization children coming of age 100 mn 17-21 year olds*. Tend to spend freely. Greater levels of education

Anticipated growth


Market size  Current market size is roughly US$ 300 bn  Only 3% is through organized retailing  96% of the 12 Million stores are less than 500 Sq. ft.  Forecast Growth rate for the retailing industry is roughly 8.3% for 2003-2008  Sales from large format stores would rise by 24-49%  Formal and modern format retailing would enjoy rapid growth

How FDI ?


FDI should be allowed in stages  Initial stages: 26% FDI




3 yrs. 3 yrs.

Establishment Phase: 49% FDI Mature Phase: 100% 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

Hot Destinations
Tier 1 cities: Delhi,Mumbai,Kolkata,Chennai Tier 2 cities: Hyderabad, Bangalore, Ahmedabad, Gurgaon, Pune, Baroda,Noida Tier 3 cities: Chandigarh, Coimbatore, Trivandrum, Faridabad, Ludhiana, Cochin, Shimla, Mysore,Amritsar

Prevailing Forthcoming Major Players Mammoths


Future Group Trent Ltd RPG Enterprise Vishal Retail Ltd Bata India Ltd
Provogue India Ltd Reliance Retail Bharti Retail Birlas Godrej Adhaar ITC e-choupal

Shoppers Stop Ltd Tatas

Current News
Eleven retailers gearing up for IPOs 40 retail players to spend $25 billion in next four years

Aditya Birla Group signifies intent to become leading player in retail industry Big Bazaar to open 60 new stores Shoppers Stop gears up for luxury retail Reliance targets Rs. 100000 crs. Retail sales target Dabur explores entering consumer retail business The retail industry in India is estimated at $427 billion in 2010 and US$ 637 billion in 2015

Recommendations
   

Grant industry status to retail Permit FDI in Retail in phases Invest in supply chain infrastructure Ease distribution infrastructure creation, octroi Ensure single window clearance for retail chains
Organize market for real estate  Ensure proper rent laws  Enforce zoning laws and city development plan  Increase land supply

Ensure flexibility of labor laws

You Will always Shop In This Way in Future !


THANKS !! THANKS

Hypermarket
Hypermarket is a superstore which combines a supermarket and a department store. Gigantic retail facility carries an enormous range of products under one roof. A consumer can ideally satisfy all of his or her routine weekly shopping needs in one trip to the hypermarket. A typical Wal-Mart Supercenter covers 150,000 square feet, A typical Carrefour 210,000 square feet Hypermarkets choose suburban or out-of-town locations that are easily accessible by automobile. The concept was pioneered by Carrefour upon opening its first such store in 1962 at Sainte-Genevive-des-Bois, France

In France, the dominant chain is Carrefour 2nd largest chain of hypermarkets in the world after Wal-Mart

Supermarket
A supermarket is a departmentalized self-service store offering a wide variety of food and household merchandise. It is larger in size and has a wider selection than a traditional grocery store. The traditional supermarket occupies a large floor space on a single level and is situated near a residential area in order to be convenient to consumers The first true supermarket in the United States was opened by ex-Kroger employee Michael J. Cullen, on August 4, 1937, in a 6,000 square foot (560 m) former garage in Jamaica, Queens, New York

Department Store
Department stores usually sell products :
Apparel Furniture Electronics Appliances Paint Toiletries & Cosmetics Photographic equipment Jewellery Toys Sporting goods.

Cash and Carry


Goods are sold from a wholesale warehouse operated either on a selfservice basis or on the basis of samples retailers Professional users, caterers, institutional buyers are customers Wholesalers buy from manufacturers and sell mostly to retailers Selling and promoting, buying and assortment building, warehousing, transporting, financing, risk-bearing, supplying market information, and providing management services Cash and carry wholesaler arrange the transport of the goods themselves and pay the goods in cash and not on credit 100% FDI is allowed in this format in INDIA. WAL-MART & BHARTI. Joint venture based on this strategy. METRO(GERMANY), CARREFOUR(FRANCE),TESCO(U.K) planning to enter through the same format.

Convenience store
A convenience store is a small store or shop, generally accessible or local. Alongside ,busy roads, gas/petrol stations. Railway stations,densely-populated urban neighborhoods. For meeting immediately or temporarily requirements. Items offered are milk, bread, soft drinks, cigarettes, coffee, slurpees, candy bars, sandwiches, pizza hot dogs, ice cream, candy, gum, chips, popcorn, maps, magazines, newspapers, small toys, feminine hygiene products, cat food, dog food, and toilet paper. CD, DVD, video game

Other retailing Formats

Kiosk Variety store