Indian Retail Industry

Presented by:Ravindra

Timeline of Retailing in India

Source: Citigroup Research

GDP growth and Retail

Retail, GDP growth Organized Retail in 2010

Organized Vs Unorganized Retail Sector Organized Retail Sector Unorganized Retail Sector

Organized Vs Unorganized Retail Sector

Factor Organized Retail Sector

Unorganized Retail Sector

Definition Modern form of retailing Traditional form of retailing

Examples Hypermarket, Retail chain etc.

Mom n Pop stores, hand cart, pavement vendors etc

Market Share 3% 97%

Market Growth 35% 6%

Challenges Poor supply chain management, aggressive expansion etc.

Use of labour intensive technology, lack of government support etc.

The organized players Indian companies

Future Group Reliance Retail Bharti Shoppers'Stop Pyramid Aditya Birla Group Subhiksha Spencer Group Tata – Westside, Tata – Chroma

Foreign Players Nike (Single brand) Levis (Single brand) Wal-mart (JV) Metro (Cash&Carry)

Pantaloon Retail

Headquartered in Mumbai 450 stores across the country employing more than 18,000 people.

All India space- 5 mn sq.ft, expecting to reach 30 mn by 2010.

Various segment including food & grocery, home solutions, consumer electronics, Health & Beauty product etc.

Recent Innovations include e-commerce ‘Hybrid Format of ‘Small shops

Raheja Group First Departmental store in India, SHOPPER’S STOP Member of IGDS

7,52,000 sq.ft. retail space with turnover of 6.75 millions

Crossword, Mothercare, Home stop etc.

MOU with Home retail group of UK

Plan to establish network of 55 hypermarkets across the country with sales turnover of US$ 100 million by2010.

Reliance Retail More than 300 Reliance fresh store and first Reliance

Mart hypermarket in Ahmedabed

Expansion in two tier cities like Vijaywada, Pune, Ludhiana etc

Investment of Rs.30,000 cr to set up new formats of retail , expecting sales of Rs.90,000 cr by 2010

Tata Retail Group Established in 1998

Trent- subsidies of Tata group operates Westside and Star India Bazaar, Croma

Plans to pen more than 27 stores across its retail formats adding 1.5 mn sq.ft. of space in the next 12 DLF malls

Aditya Birla Group Strong presence in apparel- Madura Garments

Owned Brands like Louis Phillipe, Van Heusen, Allen Solly, Peter England

Investment plan – Rs.8000-9000 cr in the first 3 years till 2010

“MORE” range of 15 supermarkets open at Nashik, Pune & other two tier cities

Organized retail and volume growth

Total size of retail $300bln

Size of organized retail $8bln

% share of Organized retail 3%

Source: Economics times retail knowledge series

Department Stores Hypermarkets Supermarkets and Conv. Stores

Well established, limited competitionEntrenched in Indian MindsetScore on shopping experienceStress on brandingPrice not critical as they cater to upper income class

Relatively new concept, but already as big as department storesGrowing fast, but competition to intensifyPrice Discount and Wide Varieties act as key attractionsKey to success will be efficient Supply Chains and Store locations

Main challenge to mom and pop storesHow to compensate for facilities that mom and pop stores provide namely Home Delivery and Monthly Credit ?Immense Competitions, building scale to achieve cost efficiencies will be critical

Major Retail Formats

Source: India Retail Report, 2007, Merrill Lynch

Market Profile of Various Formats

Department Stores: Shopper Stop, Lifestyle, Pantaloons

Hypermarkets: Big Bazaar, Spencer

Supermarkets and Conv. Stores: Subhiksha, Trinethra

Government Policies 51% FDI allowed in single-brand formats

100% FDI in cash-and-carry format

NO FDI in multi-brand stores ( like Wal-Mart)

Trends indicate that the FDI would open up in retail sector, however political consensus has to be reached before that happens

Growth Drivers Barriers to EntryConsumption Boom, Higher IncomesFavorable DemographicsChanging Lifestyles and PreferencesReal estate boomManufacturing ReformsReduction in import duties-offering

Regulatory barriers Fragmented Suppliers Lack of infrastructure Supply Chain Complexities Lack of skilled Human Resource Differential Taxation System Labor Legislation Clustering of Malls

Growth Drivers & Barriers

Outlook and challenges Strong long-term growth potential Severe cost pressure largely related to property rentals Profitability likely to remain low - patient capital should

survive but weak players likely to exit in the near term Consolidation is on the cards Driven more by traffic growth than ticket growth Convenience stores to remain integral part of retail Need for catering to local flavors Internet retailing still to pick up in India

Heard from the street…… Four years after announcing its wholesale joint venture

with Bharti Enterprises, Walmart, the world’s largest retail company, is still waiting for the multi-brand retail sector in India to open for foreign direct investment (FDI).

Aditya Birla Retail, which runs stores under the More brand, plans capital spending of 2.5 billion rupees ($55.3 million) during the fiscal year that ends in March 2012.

Retail chain Shoppers Stop today said it may increase prices of its products by 6-7 per cent from April this year in order to offset the 10 per cent excise duty imposed on branded apparel in the Budget 2011-12.

Walmart in talks to pick up stake in Future Group's Big Bazaar

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