A study of indian apparel retailers’ expansion from tier i to tier ii and tier iii cities – a...

A STUDY OF INDIAN APPAREL RETAILERS’ A STUDY OF INDIAN APPAREL RETAILERS’ EXPANSION FROM TIER I TO TIER II AND TIER III EXPANSION FROM TIER I TO TIER II AND TIER III CITIES – A CASE STUDY ANALYSISCITIES – A CASE STUDY ANALYSIS

Submitted by:

Amrapali Sinha

Khushboo Priyambada

Surendra Meena

Yogesh BherwaniM. F. M. – I

Department of FMS

Introduction

• Retailing is the final stage in a channel of distribution.

• It comprises all of the businesses and people involved in the physical movement and transfer of ownership of goods and services from producer to consumer.

• New formats such as departmental stores, hypermarkets, supermarkets and specialty stores.

Introduction

Statement of problem

• In tier I cities, there is intensified competition amongst the retailers as the market is saturated

• Many retailers are looking for growth opportunities in tier II and III cities as the disposable incomes of people in tier II and III cities have increased.

Objective

• To study current scenario of India apparel retailing.

• To understand the factors which are influencing the retail

expansion from tier I to tier II and tier III cities.

• To study the strategy among the selected Indian apparel

retailers in tier II and tier III.

Research Methodology

Data collection

In our project, we are collecting secondary data from various sources:

• Websites and e-books.• Books from the Learning Resource Centre.• Graphical Data and Journals and magazines

published by private agencies.

Data collection

1. The project is based on the secondary data.

2. This project focuses only on the apparel retail sector in India.

3. Case study of apparel retailers are taken. Only four case study

of apparel retailers are taken due to time limitation.

4. Study was done only on the apparel industry’s scenario for last

decade.

Limitation

Current Indian Apparel Retail Scenario


• Indian retailing is expanding and is expected to reach at US$637 billions by 2015.

• India is rated as the fifth most striking emerging retail market.

• Indian retail industry which stands 2nd in terms of employment generation after agriculture.

• It is estimated that 70 million Indians in a population of about 1 billion now earn a salary of $18,000 a year.


A comparative picture of GDP contribution by retail sector of year 2010

Source: Vidushi Handa, and Navneet Grover, “Retail Sector in India: Issues & Challenges”, International Journal of Multidisciplinary Research, Vol. 2, Issue 5, May 2012, ISSN 2231-5780

S. No. Country Contribution of retail sector to GDP

1 USA 12%

2 India 12%

3 China 8 – 10%

4 Brazil 6%


• The Indian Retail sector is estimated to have a market size of about $180 billion, but the organized sector represents only 2% share of this market.

Source: Hemant Sayal, “Retailing in India” International Journal of Research in Finance Marketing, Vol. 1, Issue 8, December 2011, ISSN 2231-5985


NAMECOMPANY

SHOPPERS STOP Incorporated by K.Raheja Group.

PANTALOONS It is a flagship enterprise of ‘The Future Group’

LIFE STYLE Incorporated as a part of Landmark group (Dubai)

WESTSIDE Incorporated as a part of Tata Group, Trent Ltd

GLOBUS Company is ISO 9001 certified wih ERP enable supply chain.

PETER ENGLAND, LOUIS PHILIPPE , ALLEN SOLLY,VAN HEUSEN

Bran.ds iarelicensed by Madura Garments the retail arm of AdityaBirla Group’s garment division

JOHN PLAYERS Launched by ITC Ltd

PARK AVENUE Launched Raymond Ltd

Major retailers in India


Retail sales in India

Source: Shahid Akhtar, and Iftekhar Equbal, “Organized retail in India- opportunities and challenges”, International Journal of Mulyidisciplinary Research”, Vol. 2, Issue 1, January 2012, ISSN 2231-5780.


Classification of cities and

towns

Number of

Cities

Name of cities

Tier I: Major cities 6 cities Mumbai, Kolkata, Delhi, Chennai, Bangalore, Hyderabad.

Tier II : Mainstream

Cities

58 cities Ahemdabad, Surat, Kanpur, Nagpur, Lucknow, Jaipur, Kochi, Vadodra, Indore, Ludhiana, Madurai,

Bhopal, Patna, Pune, Visakhapatnem, Vijayawada, Coimbatore, Rajahmundry, Faridabad, Jabalpur,

Jamshedpur, Allahabad, Amritsar, Raipur, Mysore, Mangalore, Bhubaneshwar, Amravati,

Aurangabad, Srinagar, Ranchi, Guwahati, Gwalior, Chandigarh, Bhilai, Siliguri, Loni, Ulhasnagar,

Kota, Howrah, Navi Mumbai, Ghaziabad, Nagpur, Thane, Nasik, Agra, Varanasi, Rajkot……

Tier III : Climbers 46 cities Tiruchirapalli, Jodhpur, Pondicherry, Aligarh, Moradabad, Indore, Gorakhpur, Patiala, Salem,

Haridwar, Katihar, Shimla, Purnia, Bilaspur, Bareily, Jalandhar, Ajmer, Bikaner, Noida, Asansol,

DurgapurDehradun, Dehradun, Firozabad, Jamnagar…

Tier IV : Small Towns 5094 cities Rohtak, Rourkela, Udaipur, Anand, Hassan, Etawah, Ratlam, Sonipat, Bhatinda, Karnal, Panipat,

Bihar Sharif, Darbhanga, Dewas, Alwar, Bardhman, Ujjain, Bhagalpur, Agartala, Bhilwara,

Mathura, Bijapur, Chandrapur, Junagarh…

Source: C. S. Dalvi, and Sayali Pataskar, “Organized retailing in smaller cities – the next move”, International Journal of Research in Commerce and Management, Vol. 2, October 2011, ISSN 0976-2183.

http://en.wikipedia.org/wiki/Classification_of_Indian_cities (accessed on 5. 12.2012)


City Population 2007-08

(million)

Average Household Income

(Rs. Per annum in 2004-05)

Average Household Expenditure

( Rs. Per annum in 2004-05)

Mumbai 20.3 4,59,457 2,01,140

Delhi 15.5 4,08,237 2,05,028

Kolkata 13.8 2,87,199 1,74,951

Chennai 6.9 3,37,059 1,55,286

Bangalore 6.6 3,00,678 1,64,923

Hyderabad 5.7 2,73,353 1,49,251

Ahmedabad 4.8 3,17,856 1,34,497

Pune 5.1 2,10,458 1,26,958

Mega Cities 78.6 3,54,090 1,76,977

Mega cities



Boom towns

• High expenditure per household

• Emerging as the largest markets following the mega cities

• Characterized by younger population

• Fastest growth in disposable income.

Current Indian Retail Scenario


(million)

Average Household Income (Rs.

Per annum in 2004-05)

Average Household Expenditure (

Rs. Per annum in 2004-05)

Surat 4.0 4,31,206 1,90,591

Kanpur 2.7 1,59,761 1,18,567

Jaipur 3.4 3,00,374 1,67,540

Lucknow 2.6 2,80,393 1,52,948

Nagpur 2.5 3,08,625 1,82,871

Bhopal 2.8 1,65,210 1,28,836

Coimbatore 1.7 2,19,846 1,52,050

Boom Towns 19.8 2,83,071 1,59,407


Boom towns


Niche cities

• Somewhat smaller in terms of overall population, but still high on

spending per household

• Household expenditure nearly the same as that found in mega cities

• Have the highest spending propensity of the three city groups



(million)

Average Household Income

(Rs. Per annum in 2004-05)

Average Household

Expenditure ( Rs. Per annum in

2004-05)

Faridabad 2.1 2,52,558 1,64,457

Amritsar 1.9 2,67,056 1,64,540

Ludhiyana 1.5 2,73,211 1,34,187

Chandigarh 1.1 4,84,775 2,12,805

Jalandhar 1.1 2,96,651 2,29,335

Niche Cities 7.7 3,04,265 1,74,287


Niche cities


• The number of operational malls was over 412 with 205 million square feet in 2010 and further 715 malls by 2015, on the back of major retail developments even in tier II and tier III cities in India.

Source: Vidushi Handa, and Navneet Grover, “Retail Sector in India: Issues & Challenges”, International Journal of Multidisciplinary Research, Vol. 2, Issue 5, May 2012, ISSN 2231-5780

Predicted mall distribution space in India


• Rapid income growth: consumers have a greater ability to spend.

• Increasing Urbanization: larger urban population that value convenience,

coupled with the higher propensity of the urban consumers to spend.

• Growing young population: growth of the post-liberalization maturing

population, with the attitude and willingness to spend.

• Spend now vs. save earlier: consumers are willing to borrow for present

consumption, which has resulted in the emergence of big retail chains in

most metros; mini metros and towns.

SWOT Analysis of Indian Apparel Retail


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Reasons for spread of organized retailing into smaller cities

• Changing Demographics and Consumption Patterns

• Consumer Behavior Trends

• Abundant Availability of Skilled Labor

Case Study of Indian Apparel Brands

Wills Lifestyle

• Wills Lifestyle, the ITC-owned premium apparel brand

• 70 exclusive specialty stores across 30 cities

Expansion plan

• Plan to open 20 stores in cities such as Mangalore, Mysore and Jodhpur

in the next 12 months

• Plans to enter 10 new cities including Jalandhar, Coimbatore, Guwahati,

Amritsar, Bhopal, Aurangabad, and Indore in the last year-and-a-half

• Different collections for different cities

• One of India's largest branded fabric and fashion retailers• 700 retail shops spread across India and overseas, in over 200

cities

Expansion plan • Raymond has opened around 250 stores in last 3 years• Target for Raymond is to open another 500 stores over the next

three years • company-owned stores & franchisee-owned stores• New towns: Jalna, Latur, Porbander, Nanded, Bardoli and

Baramati

RaymondRaymond

• In 1999, Landmark Group introduced Lifestyle Stores

• Lifestyle has 33 stores in 20 cities of the India

Expansion plan

Cities: Kolkata ,Lucknow, Ranchi , Gandhinagar, Raipur,

Allahabad , Patna, Indore, Amritsar, Bhopal

LifestyleLifestyle

PantaloonsPantaloons

• Owned by Future group.

• India’s favorite fashion chain has 57 stores across the country

offering

Expansion plan

• Pantaloons Retail plans to double the total number of stores

• Stores would be opened in Kochi, Mysore, and Vishakhapatnam

soon

• The advent of organized retailing, market saturation, rising incomes and increasing demand for better quality products into developing market of tier II and III cities is a win-win situation for all the apparel retailers.

• The success of organized retailing in tier II and III cities rests largely on further development of appropriate infrastructure.

• As per our study Wills lifestyle, Raymond, Lifestyle and Pantaloons are targeting smaller. Aiming for market saturation, these companies are planning to cover all important areas with wider expansion into tier 2 and tier 3 cities.

ConclusionConclusion

Thank you

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