Organised Retail - National Real Estate Development Council · Liberalization of FDI in multi brand...
Transcript of Organised Retail - National Real Estate Development Council · Liberalization of FDI in multi brand...
January 2015
Organised Retail
Emerging Trends and Way Forward
Watchouts Stronger
• inflation due to market inefficiencies and supply bottlenecks
• Below-average monsoon rains
India retail
landscape and
evolution
Indian Retail sector is scaling new heights with a gradual shift towards Organized retailing.
In 2013, the India retail sector was estimated at USD 520 Billion with organized retail penetration of 7.5% which is expected to reach USD 950 Billion by 2018
520
950
0
100
200
300
400
500
600
700
800
900
1000
2013 2018
US
D B
illio
n
Total Retail Market
Source: Pulse of Indian Retail Market; EY RAI Report
7.5% Organized retail
penetration
10% Organized retail penetration
2013 2018
Organized Retail Penetration
CAGR
20%
Total Retail Market Size:
USD 520
Total Retail Market Size:
USD 950
India Retail Sector – Scaling New Heights
70
12
6
4 5
1 4 3 1
Source: JLL Research-India’s retail Luxury Quotient-Exploring the Luxury clusters of India
India Retail Sector – Scaling New Heights
24
35 20
4
10
2 8
6 1
Beauty, Personal and
Healthcare
Apparel
Consumer Durables, Mobiles
and IT
Home Décor and Furnishings
Food and Grocery
Pharmacy
Jewellery, Watches and Eye
Care
Footwear
Books and Music
93%
Unorganized
Retail
7%
Unorganized retail sector is largely concentrated around the food and grocery segment, while the organized sector has harped
on apparels, accessories and lifestyle goods.
Organized Retail (2011-12) Unorganized Retail (2011-12)
Organized Retail Unorganized Retail
India Retail Sector – Growth Triggers
Growing Urbanization
Easy availability of credit
Rising Working and Younger
Population
Liberalization of FDI Policy
200 million Indians would be reaching working
age over the next two decades
27 Median age of India’s Population
Rising Income Levels
Driven by favorable demographics and rising income level, there has been transformation in Indian retail sector to match the
varying needs of the consumers
Source: For Median age- Central Intelligence Agency
Retail and Retail
Real Estate: Key
Trends
India Retail Sector – Key Trends
Entry of
Global
Retailers
1
Newer
Formats
2 5
E- retailing
3
Penetration in
Tier 2,3 cities
and beyond
4
Right Strategy
driving
exceptional
sales
• Liberalization of FDI in multi brand retail is further paving the way for entry of global retailers in India
• International retailers are introducing global best practices and formats to Indian outlets including design, layouts and fit-outs
Trend 1-Entry of Global Retailers in India
Pre 2010 2010 onwards
Timeline of entry
Brands planning to enter
USD 259
Million
FDI in Single Brand Retail
since April 2010
Leveraging the opportunity in high footfall areas through smaller formats
In order to ensure wider spread and reach, Croma introduced Zip stores and portable kiosks apart from the standardized mega store
formats
Reliance Digital – brought a similar smaller format – Reliance DX
CROMA ZIP – STORE AT AIRPORT RELAINCE DX MULTI – CHANNEL RETAILING
Trend 2-Newer Formats Smaller/ Multiple Formats to Capture Larger Footfalls
Vodafone-Stepping ahead through futuristic one stop shop experience platform for customers
Launched “Innovative Design” retail concept Based on a Concept in international markets.
offers live and engaging retail experience
VODAFONE
Trend 2-Newer Formats Offering the Experience
Vodafone
“DUNKIN’ DONUTS” VS “DUNKIN’ DONUTS & MORE”
F&B QSR Chains – Dunkin Donuts, Mc Donalds, KFC – customized their retail offering to better suit the Indian Consumers
Trend 2-Newer Formats Global + Local Approach
“It's a part re-invention. The market for ethnic
clothing is for occasions or when people feel
patriotic but ethnic as everyday wearing is not
prevalent anymore.” - William Bissell, Fabindia
Fabindia is reinventing itself with western wear line -
Fable
Trend 2-Newer Formats Global + Local Approach-Opposite end of the spectrum
INOX Cinemas – second largest cinema chain in the
country has multiplex located in following cities
• Anand
• Aurangabad
• Bangalore
• Belgaum
• Bharuch
• Bhopal
• Bhubaneswar
• Burdwan
• Chandigarh
• Chennai
• Darjeeling
• Dhanbad
• Durgapur
• Goa
• Hyderabad
• Indore
• Jaipur
• Kanpur
• Kolkata
The opportunity landscape in India spans beyond the major metros
Cinema chains footprint highlight the vastness and scale of this opportunity
Trend 3-Penetration in Tier II, Tier III and beyond
Trend 4-Right Strategy driving Exceptional Sales
Fast fashion brand Zara, which opened its shop in India in 2010 have crossed USD 83.3 Million (INR 500-crore) sales mark
It clocked 43 % annual growth in its sales for the year ended March 2014
Reasons for remarkable
Growth:
• Right Merchandise
• Brands Pricing and
Inventory Rotation
• Keeping Real Estate
cost in control
Right Product , Right Offering and Right Real Estate Strategy
Online shoppers to rise from
25 Mn to 40 Mn by 2016
USD 2.3 Billion
Market Size of E-tailing
in India
2014
USD 19 Billion-
USD 38 Billion
Market Size by end
of this decade
Source: Times of India, Business Standard, Business Today
Trend 5-Growing Prominence of E-tailing
Retail Real Estate Overview in India
Retail Real Estate
Overview in India
Retail Real Estate: Stock and Supply
Note: Figures represent the top seven cities of India – Mumbai, NCR-Delhi, Bangalore, Chennai, Pune, Hyderabad and Kolkata.
45.3 53.3
66.5 70.8 76.0 77.3 87.35
97.62 7.97
13.20
4.30 5.23
1.30 10.01
10.27
6.55
0
20
40
60
80
100
120
2010 2011 2012 2013 2014 2015 2016 2017
Bu
ilt-u
p A
rea
(Mill
ion
Sft
)
Stock Net Addition
53.3
66.5 70.8
76 77.3
87.3
97.9 104.1 Historically low supply
in last many years
2014 witnessed historically low supply in many years with very few malls getting operational
Increasing focus on developing quality international standard malls with right planning and mall
management
Rising Opportunities in emerging cities and newer locations: as retailers gear up to explore the new
opportunities beyond the Tier 1 cities
India has positioned itself firmly on the radar of international brands thus generating the opportunities
for development of next gen retail real estate development
Retail real estate developments are being upgraded to meet the global standards of international
retailers requirements
1
2
3
4
5 Coming up of various newer retail formats through collaboration of multiple stakeholders
Retail Real Estate: Key Trends
Poor infrastructure limits growth and Profitability. E -tailing
would further act as a competition to physical stores
Regulatory hurdles are high, especially in obtaining licenses
and permits
Real Estate cost especially in larger cities act as a deterrent to
growth
Quality Space Availability: Difficulty in finding suitable and
quality retail properties in bigger cities
High operational cost and deep discounting to improve
sales have affected profits of retailers
1
2
3
4
5
Retail Real Estate: Key Challenges
Key to Success
• Indian retail and real estate market is quite dynamic with fast paced evolution. The brand expansion strategy should be flexible that can change according to market conditions.
• Indian retail real estate is an opportunistic market and therefore the expansion plan should be managed/ executed strategically.
• Churning in newer and innovative ideas in order to cater the discerning consumers
• Rising opportunity in Tier I and II cities but due to lack of quality space the expansion in these cities needs to planned taking into account the consumer profile and the supply of mall developments
Retail Real Estate: The way forward
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