industry analysis

1. Industry Analysis On Indian
Corporate Retailers
GROUP-5
1. JYOTI BAJPAI
2. GAURAV SINGH
3. VIGNESH.C
4. VIDHYASRI
5. NAVANEENTH RAHUL

2. TABLE OF CONTENTS
• INTRODUCTION
• GLOBAL SCENARIO
• INDIAN SCENARIO
• STRUCTURE OF INDUSTRY
• CONDUCT
• PERFORMANCE ANALYSIS
• FUTURE OUTLOOK
• CONCLUSION

3. Introduction
• Sale of goods to the public for use or consumption rather
than for sale.
•Integrated supply chain system is used
•Buy in bulk and sell it in small quantities to the end users.
Classification of retail:
•Organised retail- trade by licensed retailers. Has higher growth
potential.( hyper markets and supermarkets)
•Unorganised retail- low cost retailing.( kiraana stores and
pavement shops)

4.  Reasons for preferring retail:
• Customer convenience
• Availability of choice (price, product)
• Space and design convenience
• Long term relationship
 Type of products in retail industry :
Retail is classified based on products type:
• Food products: cold storage facility is required.
• Durable goods : These goods do not get weared out quickly.
( electronic goods, furniture, sporting goods)
• Soft goods: These goods consists of limited period of usage.
( clothing, apparel and other fabrics)

5. Types of retail:
• Market place: It is place were goods and services are
exchanged.
• Market square: It is a place were the seller setup there
stores and the buyer browse the stores.
• Retail chains: They are known as high street stores.
Nowadays they grouped together in malls

6. Operational activities of retail :

7. Evolution of retail : ( INDIA)
Initiation (Pre 1990s) -- outlets were opened by
manufacturer.
Conceptualisation (1990-05)-- Market potential
was found by the retailer.
Expansion(2005-10)-- Corporate invested in the
retail industry. Food and grocery was started.
Consolidation (2005)-- Expansion towards rural
ands mall cities. International brands entered.
Investment in infrastructure. FDI invested from
51%-100%. Retail players increased private
label brands. Revenues were more then $700
million.

8. Global players in retail: (source: Deloitte Global Powers)
• Wal-Mart (US)
• Carrefour(France)
• Metro(Germany)
• Tesco(United kingdom)
• Lidl Stif tung&co (Germany)
Indian Players in retail:
• Pantaloon Retail
• K Raheja Group
• Tata group
• AV Birla group
• Reliance

9. INTERNATIONAL LEARNING
 Total retail contribution in World GDP is 27%.The GDP of
the World measured in terms of GWP (gross world product):
$71.83 trillion (2012).
 Organized retail in US accounts for 22% of GDP. Total GDP
of USA is 15.68 trillion USD (2012).
 Share of organized retail in developing markets ranges
between 20% to 55%.
 Retail markets are organizing faster .
 In developed markets, dominant player (Wal-Mart in US,
Tesco in UK) has a significantly higher share; enjoying up to
8-13% market share
 Departmental stores growth is declining while ‘All-under-one-
roof’& ‘neighborhood’ convenience is gaining strength.

10. RETAIL LANDSCAPE IN INDIA
• Indian Retail - dominated by unorganized sector
• Share of organized retail sector is only 8%
• FDI (51%) in the retail sector not permitted to protect local
retailers.
• Indian retail sector is one of the least concentrated in the
world.
• The top five companies hold a combined market share of less
than 2%
• India is third largest market in Asia , behind Japan and China.
• The Indian retail industry has experienced growth of 10.6%
between 2010 and 2012 and is expected to increase to USD
750-850 billion by 2015.

11. SHARE OF ORGANIZED RETAIL IN
INDIA

12. Company Size
Pantaloon Retail Ltd
(Future Group venture)
Over 2 million sq ft of retail space spread over 35 cities with 65
stores and 21 factory outlets
Shoppers Stop
(K Raheja Group venture)
Over 3.21 million sq ft of retail space spread over 23 cities with
51 stores
Spencer Retail
(part of RP-SG Group)
Retail footage of close to 1 million sq ft across 45 cities with
200 stores
Lifestyle Retail
(Landmark Group venture)
Approximately 15 lifestyle and eight Home Centre stores
Bharti Retail
74 Easyday stores with plans to invest about 2.5 billion USD
over the next five years to add about 10 million sq ft of retail
space in the country
Reliance Retail 700 stores with a revenue of 7,600 crore INR
Aditya Birla ‘More’
575 stores with approximate revenue of 2,000 crore INR.
Recently, purchased stake in Pantaloon Retail
Tata Trent
59 Westside stores, 13 Starbazaar hypermarkets and 26
13-Sep-14 Landmark bookstores 12

13. GAPS IN CURRENT ORGANIZED
RETAIL
• Lack of right formats catering to needs especially “All Under
One Roof” formats
• Absence of single trusted player with pan-India presence
• No investment in supply-chain infrastructure.
• Sole focus on front-end with minimal back-end linkages (DC,
logistics, cold chain, vendor & farmer development, etc.)
• Inconsistent availability, quality & pricing
• Transactional approach, minimal focus on customer service
over the life-cycle

14. STRUCTURE OF THE INDUSTRY
-MARKET STRUCTURE
-HHI
-PORTER’S 5 FORCE MODEL
-PESTEL ANALYSIS

15. Source: Moneycontrol.com

16. Walmart
36%
Carrefour
Tesco 10%
8%
Aldi GmbH &
Company
Metro AG
8%
Home Depot
Costco Wholesale
7%
The Kroger
Company
7%
Schwarz
Unternehmens
Treuhand KG
7%
6%
Target
6%
oHG
5%
Market share- Global
Source: Moneycontrol.com

17. Major Players- India
Net Sales(Billion $)
Pantaloon Ret Shoppers Stop Spencer Lifestyle
Bharti retail Reliance Aditya Birla “More” Tata Trent
Source Moneycontrol.com
43%
20%
9%
8%
6%
6%
5%
3%

18. HHI
Using the market shares
squares of top 10
companies (global) the
answer of Herfindahl-
Hirschman Index
(HHI) = 1728.
-moderately concentrated.
-highly competitive
market.

19. Porter’s Five Forces

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

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

22. 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.

23. PEST Analysis
Political analysis
• 1995- General agreement by world trade organization’s on
services in the trade which include the both wholesale and
retailing services.
• In 2011, FDI in single brand retail permitted to 100%
• In 2012, September , FDI in multi brand retail permitted
to 51%
Government argument :
• Huge amount of investment will increase employment
opportunities.
• Help farmers by eliminating middlemen.
• Local players may learn the effective supply chain
efficiencies from foreign retail.

24. Economic analysis
• Indian retail sector cover the 14-15% of the GDP.
• Indian retail market stands in the top five retail market in
the world.
Benefits to farmers-
• 7-10% higher price as compare to Mandi
• 3-4% incentive if they produced good quality goods.
• Increase the standard of living.

25. Social analysis
• Provide employment on large basis from lower level to
top management.
• Prices of good will be much affordable.
• Better quality products.
• Better service.
• Companies should purchase most of its good from local
markets rather than outsourcing.
• Increase in Infrastructure
• Fulfilment of unemployment gap

26. Technological analysis
•Foreign companies will bring best technologies to increase
their productivity and profit.
•They have a direct touch with farmers and trained them for
new technologies
•Farmers are getting trained freely with new technologies

27. CONDUCT

28. RETAIL PRICING
Elements of retail price:
• Cost of goods is the Cost of Merchandise Expenses
incurred towards transportation, taxes, duties, etc
• In the business process Expenses Incurred can be of two
types a following:
i)Fixed Expenses eg. Shop rent, Head Office costs etc
ii)Variable expenses eg. Merchandise margins, product
mix costs their Management either enhances or destroy
Profitability

29. Fixing The Retail Price:
• The concept of fixing retail price depends upon the
Profit to be earned which consist of following factors like.
• Profit from Merchandise planed before price fixation
• Profit to be arrived at is expressed as a mark up
percentage
Retail Price = Cost + Mark Up
Or Cost = Retail Price - Mark Up
Or Mark Up = Retail Price - Cost
• Components of the formula can be expressed inrupee
Term or as a percentage

30. RETAIL PRICING
Developing A Pricing Strategy:
• Cost Oriented Pricing
• Demand Oriented Pricing
• Competition – Oriented Pricing

31. RETAIL PROMOTION
PRODUCT LAUNCHS
• Dealer meets
• Guerilla marketing
• Press launch
• Out-of-home
DESIGN/CREATIVES
• Mall marketing
• Canters/bus
• Display
• Exhibition
BRAND ACTIVATION
• Consumer promos
• Mall activity
• School & college promos
• Road show
• Rwa ( resident welfare asscoiation) activity
• Flash mobs

32. Various Approach To Pricing
Strategy
• Market Skimming
• Market Penetration
• Leader Pricing
• Price Bundling
• Discount Pricing
• Every Day Low Pricing
• Odd Pricing

37. TECHONOLOGY
• Align product mix. The right location analytics helps retailers identify
where customers spend the greatest amount of time within the store and,
ultimately, which products carry the greatest appeal for their customers.
• Identify most appealing offers. Historical traffic data will measure the
impact of special product offers made through external marketing and in-store
campaigns.
• Ensure staff availability and expertise. Traffic analyses will uncover
peak shopping times or "power hours" when sales opportunities are at their
greatest.

38. • Create comfortable environments where customers want to be. When
retailers understand in-store traffic patterns, they are able to eliminate areas of
decreased flow, bottlenecks and other factors that can cause shopper frustration
and impede the purchase process.
• Provide access to mobile location tools. Retailers with locations enabled,
branded store apps can further improve the holiday shopping experience for
their customers.

39. Performance analysis

40. Profitability Ratio
8
6
4
2
0
-2
-4
-6
Pantaloons Retail Shoppers Stop Trent
Mar-11
Mar-12
Mar-13

41. Industry profitability analysis

42. Sales growth
Source: moneycontrol.com

43. Future outlook
 Existing players expanding to smaller towns in India
 Number of existing players like Big Bazaar, Shopper’s Stop, are
planning expansion in smaller cities
 Indian business houses in retail
 Many business houses are planning retail entry / expansion
either on their own or through partnerships
 Global Players planning entry in India
 Some of world’s largest retailers - evaluating entry in India
including Wal-Mart, Carrefour,Tesco, IKEA, Best Buy, Lowe's,
Kingfisher Group, Auchan, Woolworth, NTUC etc.
 Shop Rite, Metro, Marks & Spencers, & Spar are already here
 Some have setup Sourcing / Back-office centers e.g. Tesco, Wal-
Mart, etc.
 Rural opportunity - becoming interesting for
organized retailers

44. CONCLUSION
• The Indian retail industry encompasses a
plethora of opportunities.
• Consumer purchasing power is also increasing
every year which shows that a there are large
opportunities.