Marketing: A presentation on the trends observed in the Indian organized retail sector over the years and how it has helped in the economic growth in India.

2. 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

3. FLOW OF PRESENTATION
•
Introduction
•
Evolution of Indian retail
•
Emerging Trends
•
Research
•
Future Retail
•
Shoppers Stop
•
FDI in Retail- Present & Future Scope
•
Conclusion

4. ‚Retailing includes all the activities involved in
selling goods or services directly to final
consumers for personal, non-business use‛
- Philip Kotler

5. INTRODUCTION
•
Indian retail industry is worth 500bn $
•
Indian retail sector accounts for 22% of India’s GDP
•
Contributes 8% to total employment
Source: Report named ‘Retail Sector in India’ by Research And Markets

6. TYPES OF RETAIL
•
Organized : Trade activities undertaken by licensed retailers
•
•
Expected coverage by 2020: 20%
•
Expanding at 20% per annum
•
•
Current retail penetration: 8%
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
shop- unlicensed.
•
Current retail penetration: 92%
•
Low technical and accounting skills required
Source: Technopak Aranca Research- 2012

8. EVOLUTION OF INDIAN RETAIL
Consolidation
Expansion
Conceptualisation
2010 onward
2005–10
•
1990–05
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

10. 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

11. 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

12. EMERGING RETAIL FORMATS
•
SPECIALTY STORES
 typical specialty store gives attention to a particular category and
A
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
 retailer of such store carries variety of categories and has broad
A
assortment at average price & offer considerable customer service

For example: Food World in Bangalore

13. •
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
 essentially found in residential areas
Is

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

14. •
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
 self-service store consisting mainly of grocery and limited products on
a
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

15. •
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

16. 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

17. Contd…
•
It’s 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

18. 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

20. 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

21. 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

22. FORMS OF FDI IN INDIAN RETAIL
•
Joint Ventures
•
Franchising
•
Cash & carry operations
•
Non-store formats
•
Sourcing of supplies from small scale sector

23. GROWTH OPPORTUNITIES IN INDIAN
RETAIL INDUSTRY
Large number of retail
outlets
Rural markets offer
significant growth
potential
Private label
opportunities
• India is the fifth largest preferred retail destination globally
• The sector is experiencing exponential growth, with retail development taking
place not just in major cities and metros, but also in Tier-II and Tier-III cities
• FMCG players are focusing on rural market as it constitutes over 33 per cent of
FMCG consumer base in India
• With increasing investment in infrastructure, retailers will be able to increase their
access to high-growth potential rural market
• The organised Indian retail industry has begun experiencing an increased level of
activity in the private label space
• Private label strategy is likely to play a dominant role as its share in the US and the
UK markets is 19 per cent and 39 per cent, respectively while its share in India is
just 6 per cent

24. 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

25. 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