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Transcript of indian retail industry
1 Presented by - Pravin JadhavPresented by - Pravin Jadhav
IntroductionIntroduction ToToIndian RetailIndian Retail
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Metropolis-Hiland Park, KolkataMetropolis-Hiland Park, Kolkata175,000 Sq.ft175,000 Sq.ft
Shopping Malls In IndiaShopping Malls In India
City Centre, KolkataCity Centre, Kolkata400,000 Sq.ft400,000 Sq.ft
Forum Mall, KolkataForum Mall, Kolkata200,000 Sq.ft200,000 Sq.ft
Sigma Mall, BangaloreSigma Mall, Bangalore150,000 Sq.ft150,000 Sq.ft
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Agenda…….Agenda…….• What is retailing• Retailing: An overview• Evolution of Indian retail• Recent Trends• Categories of Indian retail• Classifying Indian retail• Retail formats• Indian retailers• Organization Structure• Functions & Process Flow• Indian consumer• Challenges in the Industry• Opportunities• FDI in Indian retailing
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What is retailing ?What is retailing ?
• Definition: Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser.
• The retail transaction is at the end of the supply chain.
• Manufacturers sell large quantities of products to retailers, and retailers sell small quantities of those products to consumers.
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Retailing World’s largest private industry US$ 6.6 trillion sales annually
Indian retailing Largest employer after agriculture -
8%* of population Highest outlet density in world Around 12 mn outlets Still evolving as an industry Long way to go
An overview
Retailing: An overviewRetailing: An overview
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Wal-Mart Topmost global Fortune 500
company(3 Consecutive Years) Annual Sales of over US$ 250 bn India’s two largest retail player
turnover around US$ 158 mn (Bata) and US$ 102 mn (Shoppers Stop)
Fortune 100 9 Retailers Carrefour, Ahold, Home Depot,
Kroger, Metro, Kmart-Sears, Target, Albertsons’
An overview
Retailing: An overviewRetailing: An overview
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Weekly MarketsVillage FairsMelas
Convenience StoresMom and Pop/ Kiranas
Khadi StoresCooperatives
Exclusive Brand OutletsHyper/Super MarketsDepartment StoresShopping Malls
Traditional Reach
Government Supported
Historic/Rural Reach
Modern Formats/ International
Evolution of Indian retailEvolution of Indian retail
Source of Entertainmen
t
Neighborhood Stores/Convenie
nce
Availability/ Low Costs / Distribution
Shopping Experience/Efficie
ncy
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Unorganized: Father & son businessFragmented: Individually owned businesses, average size= 50 sq. ftRural bias: Nearly 2/3rd of stores are in rural areas (two forms: "Haats" & “Melas“)
Unorganized: Father & son businessFragmented: Individually owned businesses, average size= 50 sq. ftRural bias: Nearly 2/3rd of stores are in rural areas (two forms: "Haats" & “Melas“)
Traditionally retail industry:Traditionally retail industry:
Format Experimentation : Retail EvolvingStore design: To create a “customer-pull” to increases impulse shoppingEmergence of discount store: Wal -mart modelUnorganized retailing getting organized: Organized malls ..??
Format Experimentation : Retail EvolvingStore design: To create a “customer-pull” to increases impulse shoppingEmergence of discount store: Wal -mart modelUnorganized retailing getting organized: Organized malls ..??
New Retail Industry:New Retail Industry:
Recent Trends..Recent Trends..
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Corporate Houses Tatas: Tata Trent RPG group: Food World, Health and Glow, etc ITC: Wills Life Style Rahejas (Shoppers Stop)
Dedicated brand outlets Nike, Reebok, Zodiac etc
Multi-brand outlets Vijay Sales, Viveks etc
Manufacturers/ Exporters Pantaloons, Bata, Weekender
Indian retail
Categories of Indian retailCategories of Indian retail
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Modern Format retailers Supermarkets (Food
world) Hypermarkets (Big
Bazaar) Department Stores (S Stop) Specialty Chains (Ikea) Company Owned Company Operated
Traditional Format Retailers Kiranas: Traditional Mom and Pop
Stores Kiosks Street Markets Exclusive /Multiple Brand Outlets
Indian retail
Classifying Indian retailClassifying Indian retail
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Retail formats-the variablesRetail formats-the variables
Retail formats-Differ on
Types of merchandise Services-degree to which their offerings
emphasize service vs. merchandise Target customers • Nature of retail mixes-merchandise assortment,
place, pricing , promotions, store design and display, customer service, people
• Ownership of firm
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Types Of FormatsTypes Of Formats
• Family store- In apparel retailing ,when needs of the whole family are met
• Specialty store- narrow product line but with good width and depth in that product e.g. The Mobile Store
• Departmental store- large format, usually greater than 10000 sqftHas different depts like men’s wear, cosmetics, home etc
e.g. Shopper’s StopThese retailers are general merchandisers offering mid-to-high quality products and strong level of services
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Cont……Cont……
• Supermarket-Basically specialized in foodstuff ,grocery and rationsAlso carries limited non-food categories. e.g. FoodworldUsually around 3000 sqft.
• Hypermarket-Spread over 2 lakh sqft and more, retailing groceries and general merchandise ,with pharmacy, flower shop ,photo shop etcIt has huge qtities and sells huge volumes at low margins. e.g. Hypercity
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Hypermarket Big Bazaar Giants Shoprite Star Bazaar
Department store Lifestyle Pantaloons Pyramids Shoppers Stop Trent
Entertainment Fame Adlabs Fun Republic Inox PVR
Indian retailers
Large Indian retailersLarge Indian retailers
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Retail OrganisationRetail Organisation: Typical Organization Structure: Typical Organization Structure
Organization
Front End OperationBuying &
MerchandisingSCM Retail Sales
Zonal HeadArea Manger
Store ManagerAss.Store Manager
Dept. MangerTeam LeaderSales boy/girl
HeadChief
GM/DGMSr. Mgr/Mgr
Dy.Mgr/Ass.MgrSr .Exc /ExcCoordinator
HeadChief
GM/DGMSr. Mgr/Mgr
Dy.Mgr/Ass.MgrSr .Exc /ExcCoordinator
HeadChief
GM/DGMSr. Mgr/Mgr
Dy.Mgr/Ass.MgrSr .Exc /ExcCoordinator
Functions & Process FlowFunctions & Process Flow
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Designing Forecasting
Merchandising Strategy
Fabric Sourcing
Warehouse
Garment Vendor
Distribution Centre
Store
Functions & Process FlowFunctions & Process Flow
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Merchandiser Indent/Requisition
Fabric Sourcing
P.O
Supplier Delivery Challan
Warehouse G.R.N. Inward Inspection
Supplier
Reject
Work order
Accept
Merchandiser
Warehouse D. C. Store
Functions & Process FlowFunctions & Process Flow
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Operation Retail Sales Merchandising
ABP PlanningAssortment PlanningRange Planning
Sales TargetsSales Tracking
Offers
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Greater per capita income Increase in disposable income of
middle class households 20.9%* growth in real disposable
income in 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
Indian consumer
The changing Indian consumerThe changing Indian consumer
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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
Indian consumer
The changing Indian consumerThe changing Indian consumer
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Low domestic competition Because of fragmented nature of
industry
Lack of exposure to global best practices
Low entry barriers for unorganized retailing
Moderate entry barriers for organized retailing
IndustryChallenges
Challenges in the IndustryChallenges in the Industry
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Real Estate Costs
Supply Chain Inconsistency
Poor Infrastructure
Lack of Skilled Manpower
issues
Challenges……Challenges……
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Market size Current market size is roughly US$
286 bn* 96% of the 12 Million stores are less
than 500 Sq. ft. Forecast Growth rate for the retailing
industry is roughly 8.3% for 2008-2009
Sales from large format stores would rise by 24-49%**
Formal and modern format retailing would enjoy rapid growth
Anticipated growth
OpportunitiesOpportunities
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Growth determining factors
Government Policy Infrastructure development GDP growth Employment generation and job
creationIn several new sunrise industriesImplies greater purchasing power
Growth factors
Growth factorsGrowth factors
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India ranked 1st in the Global A.T Kearney Retail Development Index
India
Russia
China
Advantage India
The Indian advantageThe Indian advantage
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THE SIZE OF THE OPPORTUNITYTHE SIZE OF THE OPPORTUNITY
Products
Total Retail Organised Organised
Rs. Billion Retail Retail as %
Rs. Billion of Total
Food & Grocery 6422 50 1
Textiles & Apparel 980 185 19
Jewelry & Watches 554 30 5
Consumer durables 415 43 10
Pharmaceuticals 364 10 3
Home Solutions 351 32 9
Books, Music & Gifts 115 15 13
Others 1159 111 10
Total 10360 476 5
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Current Indian FDI Regime
100 % FDI not permitted in retail trade sector
FDI up to 51 % in single brand is allowed
FDI in Retail not
permitted
FDI in Indian retailingFDI in Indian retailing
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Franchise International company gives name
and technology to local partner. Gets royalty in return
In case master franchise is appointed for region or country, he has right to appoint local franchisees
Nike, Pizza Hut, Tommy Hilfiger, Marks and Spencer, Mango
Manufacturing Company sets up Indian arm for
production Bata India. It also has right to retail
in India
How they are present
International retailers in India: International retailers in India: StrategiesStrategies
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Distribution
International company sets up local distribution office
Supply products to Indian retailers to sell
Also set up franchised outlets for brand
Wholesale trading
Cash and Carry operations 100% FDI permitted Metro Cash n Carry
How they are present
International retailers in India: International retailers in India: StrategiesStrategies
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Improve competition Develop the market Greater level of exports due to
increased sourcing by major players Sourcing by Wal-Mart from China
improved multifold after FDI permitted in China
Similar increase in sourcing observed for Metro in India
Provides access to global markets for Indian producers
Benefits of FDI
Why FDI?Why FDI?
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