1. Retail Industry
Amit Rai
Ankit Surana
Anish Pandey
Abhishek Tiwari
Anubhav Srivastava

2. Retail Industry
2

3. Evolution of Indian Retail Industry
 Barter system was known as the first form of Retail
 Followed by Kirana Stores and Mom & Pop Stores
 Finally Manufacturing era necessitated the small stores and specialty stores
 It was a seller’s market till this point of time with limited number of brands
available
 1980s experienced slow change as India began to open up economy.
 The latter half of the 1990s saw a fresh wave of entrants with a shift from
Manufactures to Pure Retailers.
 Post 1995 onwards saw an emergence of shopping centers
 Emergence of hyper and super markets trying to provide customer with 3 Vs
- Value, Variety and Volume
 Expanding target consumer segment

4. Overview
4

5. Industry Description
 Indian retail Industry is Fifth
largest in the world.
 The current penetration
pegged at 5-7 per cent.
 Accounts for 24% of
country’s GDP and 8% of
the total employment.
 Food is the largest
segment in terms of its.
5

6. Tax Impacts and Regulatory Environment
The retail sector has not been conferred an industry status till now. Hence,
there are no specific rules and regulations governing the sector. However,
there are certain laws pertaining to the establishment of stores and conduct
of activities, which retailers need to follow:
 The Shop and Establishments Act
 The Standards of Weights and Measures Act
 The Provisions of the Contract Labor(Regulations and Abolition) Act
 The Income Tax Act
 The Customs Act
 The Companies Act
In addition to the above law: Retail companies have to follow certain regional
rules and regulations on the basis of their stores location; different states
have different laws to regulate the retail trade.
6

7. Tax Impacts
Presently, there are multiple indirect taxes:
Customs duty
Central Value Added Tax (CENVAT)
Service tax
Central Sales Tax (CST)
State value added tax
Central value added tax
Entry tax
GST implementation :-In order to integrate all of these taxes into a single
unified tax system and bring about broad-based reforms in the indirect
tax regime, the government of India has envisaged The introduction of
a uniform Goods and Services Tax (GST) across the country.
7

8. Regulatory Environment
FDI Policy with regard to Retailing in India:
 FDI up to 100% for cash and carry wholesale trading and export
trading allowed under the automatic route.
 FDI up to 100 % with prior Government approval (i.e. FIPB) for
retail trade of Single Brand‘ products.
 India allowed FDI of up to 51% in ―multi-brand sector.
 Single brand retailers such as Apple and Ikea, can own 100% of
their Indian stores, up from previous cap of 51%.
 The retailers (both single and multi-brand) will have to source at
least 30% of their goods from small and medium sized Indian
suppliers.

9. Regulatory Environment Contd..
 Multi-brand retailers must bring minimum investment of US$ 100
million.
 Half of this must be invested in back-end infrastructure facilities such
as cold chains, refrigeration, transportation, packaging etc. to
reduce post-harvest with 3 years of setup.
 Losses and provide remunerative prices to farmers.
 The opening of retail competition (policy) will be within parameters of
state laws and regulations.
 Overseas companies must put half of their investment in
infrastructure such as processing, manufacturing, storage,
warehouses and packaging

10. Structure & Phase of The Industry
Retail formats in India:
 Hyper marts/supermarkets
 Mom-and-pop stores
 Departmental stores
 Convenience stores
 Shopping malls
 E-trailers
 Discount stores
 Vending
 Specialty stores

11. Stage
 The retail Industry is still in its nascent stage of growth
 The foreign direct investment (FDI) inflows in single-brand retail
trading during April 2000 to June 2012 stood at US$ 42.70 million
 Cash and carry represents an opportunity worth around Rs 8,250
billion (US$ 149.19 billion) of the Rs 27,500 billion (US$ 497.29
billion) annual retail business in India
 India's e-retail industry is likely to touch Rs 7,000 crore (US$ 1.26
billion) by 2015, up from Rs 2,000 crore (US$ 361.66 million)
 Focus on rural sector increasing

12. Size
 The Indian retail market is currently estimated at USD 450 billion.
 Food segment contributes largest part of total value of retail market,
followed by fashion, leisure & entertainment and fashion accessories.
 India's organized retail space is evolving fast and achieve penetration
level of 7%, which signifies huge potential growth.
 Indian luxury market currently stands at USD 3.5 billion and expected to
grow to make India the twelfth-largest luxury retail market in the world
by 2016.
 Retail has become largest source of employment and has deep
penetration into rural India. Retailing contributes to 22% of GDP and
around 8% of the employment.

13. Retail Growth In India Organized Retail Growth In India

15. Key Success Factors for the industry
 Effective forecasting
 Strong balance sheet
 Stock control
 Market position
 Proximity to market
 Creating Systems In Retail
 Hiring the Right Employees
 Marketing
 Buying The Right Merchandise
 Customer Service

16. Risks for Retail Sector
 Low-growth consumer markets
 Regulation and compliance
 Inability to control costs/rising input prices
 Inability to benefit from e-commerce
 Wrong price image
 Supply chain disruptions
 Inability to penetrate emerging markets
 Failure to respond to shifting consumer behavior
 Sourcing
 Volatility in commercial real estate markets

17. Opportunities for Retail Sector
 Rising emerging market demand and rise of global middle class
 New marketing channels and social media
 Competitive differentiation via CSR and green branding
 Multichannel approach
 Demographic change
 Private label
 Launching new products and services
 Global urbanization
 Competitive differentiation via local branding
 Enhancing efficiency in the supply chain

18. Porter‘s Five Force Model

19. Threat of New Entrants Power of Suppliers
Historically, retailers have tried to
95% of the market is made up of exploit relationships with supplier.
small, uncomputerised family run
stores.
In retail industry suppliers tend to
The ability to establish favorable have very little power.
supply contracts, leases and be
competitive is becoming virtually
impossible. Following examples explain the
same.
The vertical structure and
centralized buying gives chain Sears in 1970 set very high
stores a competitive advantage standards for quality; suppliers that
over independent retailers. did not meet these standards were
dropped from the Sears line.
On the whole threat from new
entrants in retail industry is high. Walmart places strict control on its
suppliers.

20. Power of Buyers Availability of Substitutes
The tendency in retail is not to
Customers have comparatively specialize in one good or service,
high bargaining power in but to deal in wide range of
unorganized sector than in products and services.
organized sector.
What one store offers is likely to
As the customer will demand be same as that offered by
products from organized units he another store.
will be more focused towards
quality aspect
The threat from substitutes is high.

21. Competitive Rivalry
Retailers always face stiff competition and must fight with each
other for market share and also with unorganized sector.
They have tried to reduce cut throat pricing competition by offering
frequent flier points, memberships and other special services to try
and gain the customer‘s loyalty.
Thus retailers give each other stiff but healthy competition which is
evident from their aggressive marketing strategies and segment
policies.

22. SWOT Analysis
Strengths
Major contribution to GDP: the retail sector in India is hovering
around 33-35% of GDP as compared to around 20% in USA.
High Growth Rate: High Potential: since the organized portion of retail
sector is only 2-3%, thereby creating lot of potential for future players.
High Employment Generator
Low Labor Cost
Technology intensive industry
Rising disposable income
Urbanization
Shopping convenience
Changing consumer habits and lifestyles
High availability of quality retail space

23. Weakness
 Policy related issues
 Lack of industry status for retail.
 Numerous license, permits and registration requirement.
 Limited consumer insight
 Lack of detailed region specific customer data.
 Lack of Skilled Labor
 Taxation hurdle
 Inconsistent octori, entry tax structure, vat and multiple taxation issues.
 large grey market presence.
 Underdeveloped supply chain
 Underdeveloped logistics infrastructure &absence of national cold
chain networks.
 Lack of adequate utilities
 Lack of basic infrastructure like power, transport and communication.

24. Opportunities
 Potential for investment.
 Locational advantage.
 Sectors with high growth potential.
 Fastest growing formats.
 Rural retail.
 Create transparency in the system
 Healthy Competition will be boosted and there will be a check on the
prices (inflation)
 Intermediaries and mandi system will be evicted, hence directly
benefiting the farmers and producers
 Quality Control and Control over Leakage and Wastage
 Heavy flow of capital will help in building up the infrastructure for the
growing population

25. Threats
 Political issues.
 Social issues.
 Inflation.
 Nostalgia
 Lack of differentiation among the malls that are coming.
 Poor inventory turns and stock availability measures.
 Big players can knock-out competition
 Current Independent Stores will be compelled to close
 India does not need foreign retailers
 Remember East India Company it entered India as trader and then
took over politically.
 The government hasn‘t able to build consensus.

26. Demand-Supply Dynamics, Demand Trends
 The global demand has been falling consistently due to crisis in US
and Europe.
 On the supply side, retailers are slowing down their expansion plans
and many real estate developers are falling behind schedules in their
shopping mall projects, considering the credit crunch.
 However in Future Indian retail is expected to grow 25 per cent
annually. Modern retail in India could be worth US$ 175-200 billion
by 2016.
 The Food Retail Industry in India dominates the shopping basket.
The Mobile phone Retail Industry in India is already a US$ 16.7
billion business, growing at over 20 per cent per year.
 The Retail sector in the small towns and cities will increase by 50%
to 60% pertaining to easy and inexpensive availability of land and
demand among consumers.

27. Markets for the Products
 India has emerged as the fifth most favourable destination for
international retailers.
 Rural marketing through direct channel contributes about 23 per cent
of the firm's total sales, which it expects to increase to more than 35
per cent in the next three years.
 India's franchise market is growing at a healthy pace with tier II and
tier III cities gradually getting attracted to the network of retailers and
franchisers.
 Indian apparel retailers are increasing their brand presence
overseas in developed markets. While most have identified a gap in
countries in West Asia and Africa, some majors also looking at US
and Europe.
 India will be a high potential market with accelerated retail growth of
15-20 per cent expected over the next five years according to a
report.

28. Company Name Net Sales(Billion $) Country
Walmart $421,849.00 USA
Carrefour $120,297 French
Tesco $94,185 UK
Metro AG $89,081 German
The Kroger Company $82,189 USA
Schwarz Unternehmens
Treuhand KG $77,220.00 German
Costco Wholesale $77,946 USA
Home Depot $67,997 USA
Target $67,390 USA
Aldi GmbH & Company
oHG $58,000 German

29. Company Name Net Sales(Billion $)
Pantaloon Ret 0.79
Shoppers Stop 0.37
Trent 0.16
Brandhouse 0.14
REI Six Ten 0.11
Provogue 0.11
Koutons Retail 0.10
Kewal Kiran 0.05
Cantabil Retail 0.03
Arunjyoti Enter 0.01
Prozone Capital 0.00

30. Major Players
Provogue Koutons Retail
Others 6% 6%
12%
Pantaloon Ret
Trent 43%
7%
Brandhouse Shoppers Stop
8% 18%
Pantaloons Retail India Ltd. is market leader with 43% of the market
share in terms of turnover
Followed by Shoppers stop, Brandhouse, Trent, Provogue
Source Moneycontrol.com

31. Cost Structure

32. Profit Trend

33. ROCE

34. Trent
 The Company’s operations consist of Westside stores, Star Bazaar and Landmark
stores.
 The Westside stores include a private label fashion apparel format. During fiscal
year ended March 31, 2012 (fiscal 2012), 13 stores were opened, including the
Bhopal (DB City Mall), Pune (Phoenix Market City), Mumbai (Infinity Mall), Varanasi
(Dhanushree Complex ), New Delhi (Moments Mall), Mumbai (R-City Mall), Bilaspur
(City Mall), Udaipur (Rkay Mall) and Bangalore (Orion Mall).
 The Star Bazaar is the discount hypermarket format. As of March 31, 2012, there
were 15 operational stores (three in Mumbai (Andheri, Dahisar and Thane), four in
Bangalore, two in Ahmedabad and Pune, one each in Aurangabad, Surat, Chennai
and Kolhapur).
 The Landmark stores include the format retailing inter-alia books, music, toys and
gaming, which are managed by a subsidiary of the Company, Landmark Limited.
 The company disclosed rise of 24.70% in standalone net profit on y-o-y basis to Rs
127.64 million, while total income rose 12.65% y-o-y basis to Rs 2.20 billion for the
quarter ended June 2012.

35. Key Financials (Trent)
Period & months 2012/03 2011/03 2010/03 2009/03 2008/03
Net Operating Income 8698.8 6861.5 5633.3 5117.3 5141.6
Cost of Sales 8827.3 6789.3 5479.1 5029.7 4958.6
Reported PBDIT -128.5 72.2 154.2 87.6 183
Other Recuring Income 902.5 695.8 430.7 259.7 42.9
Adjusted PBDIT 774 768 584.9 347.3 419
Depreciation 159.5 136.3 118.5 92.3 88.5
Other Write-offs 0 0 0 0 0
Adjusted PBIT 614.5 631.7 466.4 255 330.5
Finanical Expenses 77.1 123 95.1 43.3 42.9
Adjusted PBT 537.4 508.7 371.4 211.7 287.6
Tax Charges 100.7 172.3 105.7 30.7 47.4
Adjusted PAT 436.7 336.5 265.7 181 240.2
Non-recurring Items -91.6 94.7 122 66.1 85.6
Other Non-cash Adjustments 127.6 -0.8 14.5 20.5 2.9
REPORTED PAT 472.7 430.4 402.2 252.1 325.8

36. Shoppers Stop
 Incorporated as a private limited company on June 16, 1997
 The foundation was made by K Raheja Corp
 Shopper's Stop Limited (SSL) is engaged in the business of retailing
variety of household and consumer products and books through
departmental stores.
 As of March 31, 2012, SSL operated through 51 departmental
stores.
 As of March 31, 2012, it opened 13 departmental stores, which
includes two stores in Chennai and Pune and one each at Indore,
Vijayawada, New Delhi, Mysore, Latur, Ahmedabad, Mumbai,
Bengaluru and Gurgaon.
 During the fiscal year ended March 31, 2012, the Company also
opened seven HomeStop one each at Lucknow, Vijayawada, Pune,
Bengaluru, Ahmedabad, Mumbai, hydrebad taking its tally to 11
stores.
 In May 2012, it opened Shoppers Stop store at Jalandhar.

37. Key Financials (Shoppers Stop)
Period & months 2012/03 2011/03 2010/03 2009/03 2008/03
Net Operating Income 20,347.60 19,290.00 15,683.70 13,275.10 11,460.10
Cost of Sales 17,134.20 16,264.90 13,122.20 11,478.70 9874.2
Reported PBDIT 3213.3 3025.2 2561.5 1796.4 1585.9
Other Recuring Income 186.9 90.8 43.2 79.5 1131.1
Adjusted PBDIT 3400.2 3116 2604.7 1875.9 1669.4
Depreciation 377.2 310 310.3 631.3 392.7
Other Write-offs 0 0 0 0 0
Adjusted PBIT 3023 2806 2294.4 1244.6 1276.7
Finanical Expenses 2039.1 1668.3 1601.1 1556.4 1131.1
Adjusted PBT 983.9 1137.7 693.4 -311.8 145.6
Tax Charges 335.5 386.5 211.3 58.9 62.8
Adjusted PAT 648.4 751.2 482.1 -370.7 82.8
Non-recurring Items -5.8 0.5 38.6 -266.5 -0.5
Other Non-cash Adjustments 0 0 -18.4 0 -12.7
REPORTED PAT 642.6 751.8 502.3 -637.2 69.7

38. Provogue
 Provogue (India) Limited (PIL) was incorporated on 17th November
1997 as Acme Clothing Private Limited.
 Divisions of the company include accessories, women's wear and
men's wear.
 The EPS of company has dropped from 12.56 in 2012 to 2.17
currently.
 The sales and Net worth have also dropped significantly.
 PAT has come down to -25.08 crores from 17.85 crores from last year.
 The tactical marketing policies, aggressive promotional campaigns,
and unique distribution techniques through malls, stores have helped
Provogue grow to become a leader in the garments segment in India.
 This concept of being different has carved out a definite niche in the
hearts of the buyers.
 Overall the outlook looks very strong and positive and is the best bet in
the companies among retail.

39. Key Financials (Provogue)
Period & months 2012/03 2011/03 2010/03 2009/03 2008/03
Net Operating Income 6095.9 5622.6 4806.7 3567.6 3361.4
Cost of Sales 5499 4921.6 4287.1 3211.6 2885.4
Reported PBDIT 596.9 701 519.6 356 476
Other Recuring Income 152.7 151 187.4 231.7 164.2
Adjusted PBDIT 749.6 852 707 587.8 565.5
Depreciation 118.1 119.3 122.8 95.1 81.1
Other Write-offs 0 0 0 0 0
Adjusted PBIT 631.5 732.7 584.2 492.7 484.4
Finanical Expenses 322.1 260.4 199.5 149.7 164.2
Adjusted PBT 309.4 472.3 384.7 343 320.2
Tax Charges 45.8 85.6 119.4 109.5 63.5
Adjusted PAT 263.6 386.8 265.3 233.5 256.7
Non-recurring Items -13.3 -48.3 13 60.1 7.5
Other Non-cash Adjustments 0 -4.4 5.3 1 -6.1
REPORTED PAT 250.3 334.1 283.5 294.6 259.7

40. Brand House Retail
 Brandhouse Retails was established as a pure play retail
organization. As a company that caters to the entire spectrum of the
socio-economic stratum in the Indian market
 BHRL’s retail expertise extends from mid-price to the lifestyle and
luxury segment.
 HRL is amongst the leading fashion retailers in India. It currently
manages the retailing of the following brands through exclusive
brand outlets across India Reid & Taylor, Belmonte, Carmichael
House and dunhill.
 A network of 784 company-operated and franchise stores across the
country of approximately 8.93 lac sq ft. each one focus on garments,
fashion accessories and home furnishings offering international &
domestic brands.
 91 Cities, 784 Stores and 6.6 Sq. Ft of retail area covered.

41. Key Financials (Brand House Retail)
Period & months 2012/03 2011/03 2010/03 2009/03 2008/03
Net Operating Income 7834.8 7374.5 6574.6 5523.5 3137.9
Cost of Sales 7286.5 6777.8 6010.2 5108.2 2833.8
Reported PBDIT 548.3 596.6 564.4 415.3 304.1
Other Recurring Income 0.9 2.7 22.9 0.6 38.8
Adjusted PBDIT 549.2 599.4 587.3 415.9 311.6
Depreciation 97.4 98.8 85.6 82.8 47.1
Other Write-offs 0 0 0 0 0
Adjusted PBIT 451.8 500.6 501.7 333.1 264.5
Finanical Expenses 297.7 283.1 191.6 87.8 38.8
Adjusted PBT 154.1 217.5 310.1 245.3 225.8
Tax Charges 54.3 60.5 113.8 104 95.1
Adjusted PAT 99.7 157 196.4 141.3 130.7
Non-recurring Items 0 -0.2 0.1 -4.1 0.5
Other Non-cash Adjustments -14.7 44.4 -34.4 -3.4 -0.1
REPORTED PAT 85 201.2 162.1 133.9 131.1

42. Pantaloon Retail (India) Ltd
 Pantaloon Retail India Limited (PRIL), a retailer was incorporated in 12th
October of the year 1987, headquartered in Mumbai
 Company operates through primarily the Lifestyle' and Value' formats
through multiple delivery mechanisms and lines of business, some of them
being, fashion, food, general merchandise, home, leisure and entertainment,
financial services, communications and wellness.
 The Company has stores in 51 cities across the country, constituting over 6
million square feet of retail space.
 Caters to the Lifestyle' segment through its 35 Pantaloons Stores and 5
Central Malls, as well as through 78 Big Bazaar hypermarkets, 113 Food
Bazaars.
 In the year 1991, the company had launched BARE, the Indian jeans brand.
Initial public offer (IPO) was made in May of the year 1992
 Multiple retail formats including Collection i, Furniture Bazaar, Shoe Factory,
EZone, Depot and futurebazaar.com are launched across the nation in the
year 2006

43. Key Financials (Pantaloon Retail (India) Ltd)
Financial Year Ending 2012/06 2011/06 2010/06 2009/06 2008/06
Net Sales 4,326.79 4,840.96 5,630.21 7,026.81 5,941.22
Cost of Sales 3,966.22 4,385.83 4,953.65 6,346.09 5,449.77
Reported PBDIT 785.56 455.13 676.56 680.72 491.45
PBDT 486.99 261.66 375.52 356.28 279.01
PBIT 593.1 308.76 514.68 540.67 408.06
PBT 294.53 115.29 213.64 216.23 195.62
PAT 285.05 76.67 179.56 140.58 125.97

44. Future Prospects

45. Future Prospects Cont.
 Uncertain macroeconomic environment
 Prices of apparel also surged concomitantly with the increase in
cotton prices and the levy of excise duty on branded apparel
 Store expansion to drive revenue growth
 Retail consumption growth to remain strong
 The overall retail market is likely to grow at healthy compounded
rate of 15 per cent from Rs 24 trillion in 2011-12 to Rs 47 trillion in
2016-17
 Organized retail penetration to cross 10% by 2016-17
 Food , Grocery & Beauty products to grow faster
 Slower growth expected in books, home décor, and consumer
durables.
 Focus on reducing store-level operating expenses