RETAIL Framework[1]

8/3/2019 RETAIL Framework[1]

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RETAIL


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INDIAN ECONOMY

10th largest economy in the world based on GDP

7.5% GDP growth forecasted over 2005-2007

Real estate sector growing at 30% per annum and oneof the largest employer a key contributor to GDP

Residential market is 80% of the total real estatemarket

Gap between supply and demand in residential marketis 41 billion sq.ft.

Office space demand of 66 million sq.ft. for IT industryover next 5 years


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INDIAN ECONOMY

Real Estate in India projected to be USD 50 billion in 2008

Organized retail space demand of 40 million sq.ft. over next 3-4 years

India is ranked the 5th largest retail destination across theglobe

Consumerism the order of the day, which is fueling thegrowth in both the commercial as well as the retail sector

Globalization of Indian Economy


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BURGEONING CONSUMING CLASS

4th largest economy in the

world (measure in Purchasing

Price Parity terms) and is

expected to move up to 3rd

placing by 2010 Economy expected to grow at

6-7% p.a. over the next few

years

Disposable income per capita

is expected to rise at an

average of 8.5% p.a. till 2015

Source:

Economist Intelligence Unit & CapitaLand Research.

The Great Indian Retail Story, Ernst & Young.


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WORLDS YOUNGEST POPULATION

More than 50% of the population under the

age of 25 years and

has grown up in post liberalisation era Urban population is projected to increase

from the current 28% to

40% of the total population by 2020 PUT A GRAPH OF MEDIAN AGE IN THE

WORLD


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INDUSTRY EVOLUTION

The emergence of the neighborhood Kirana stores catering to the convenience of the consumers

Era of government support for rural retail: Indigenous franchise model of store chainsrun by Khadi & Village Industries Commission

1980s experienced slow change as India began to open up economy. Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim first

saw the emergence of retail chains Later Titan successfully created an organized retailing concept and established a series of

showrooms for its premium watches

The latter half of the 1990s saw a fresh wave of entrants with a shift from Manufactures toPure Retailers.

For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World inmusic; Crossword and Fountainhead in books.

Post 1995 onwards saw an emergence of shopping centers, mainly in urban areas, with facilities like car parking targeted to provide a complete destination experience for all segments of society

Emergence of hyper and super markets trying to provide customer with 3 Vs - Value,Variety and Volume

Expanding target consumer segment: The Sachet revolution - example of reaching to thebottom of the pyramid.

At year end of 2000 the size of the Indian organized retail industry is estimated at Rs.13,000 crore


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INDIAN RETAIL SCENARIO

Total Private Consumption Expenditure in India 375Billion USD

Retail Sale 205 Billion USD (55%)

Organized Retail 6.2 Billion USD (3%)

Retailing 35% of GDP

Outlet Estimates Over 12 Million

Format Only 4% larger than 500 sq.ft.

Second Largest Employer after Agriculture


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RETAILING IN INDIA

Emergence of modern retail formats

Increased pressure on opening up FDI in retail sector

Rapid Evolution of New-age Young Indian Consumers

Rapidly increasing middle class

Rising Incomes levels

Increased Awareness Level among Consumers

Exposure to International Brands

Retail Space is no more a constraint for growth


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RETAIL FORMATS IN INDIA

Malls:The largest form of organized retailing today. Located mainly inmetro cities, in proximity to urban outskirts. Ranges from 60,000 sqft to 7,00,000 sq ft and above. They lend an ideal shoppingexperience with an amalgamation of product, service andentertainment, all under a common roof.Examples includeShoppers Stop, Piramyd, Pantaloon.

Specialty Stores:

Chains such as the Bangalore based Kids Kemp, the Mumbai

books retailer Crossword, RPG's MusicWorld and the Times

Group's music chain Planet M, are focusing on specific

market segments and have established themselves strongly

in their sectors.

Discount Stores:

As the name suggests, discount stores or factory outlets,

offer discounts on the MRP through selling in bulk reachingeconomies of scale or excess stock left over at the season.

The product category can range from a variety of

perishable/ non perishable goods

DepartmentStores:

Large stores ranging from 20000-50000 sq. ft, catering to avariety of consumer needs. Further classified into localizeddepartments such as clothing, toys, home, groceries, etc.

DepartmentStores:

Departmental Stores are expected to take over the apparelbusiness from exclusive brand showrooms. Among these,the biggest success is K Raheja's Shoppers Stop, whichstarted in Mumbai and now has more than seven large

stores (over 30,000 sq. ft) across India and even has its ownin store brand for clothes called Stop!.

Hypermarts/Supermarkets:

Large self service outlets, catering to varied shopper needsare termed as Supermarkets. These are located in or nearresidential high streets. These stores today contribute to30% of all food & grocery organized retail sales. SuperMarkets can further be classified in to mini supermarketstypically 1,000 sq ft to 2,000 sq ft and large supermarketsranging from of 3,500 sq ft to 5,000 sq ft. having a strongfocus on food & grocery and personal sales.

ConvenienceStores:

These are relatively small stores 400-2,000 sq. feet located

near residential areas. They stock a limited range of high-turnover convenience products and are usually open forextended periods during the day, seven days a week. Pricesare slightly higher due to the convenience premium.

MBOs :

MultiBrand outlets, also known as Category Killers, offerseveral brands across a single product

category. These usually do well in busy market places andMetros.


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MAJOR RETAILERS IN INDIA


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GROWING ORGANISIED RETAIL

SECTOR

Highly fragmented retail sector, organised retailonly constitutes 3%

of the current retail market

Organised retail sector expected to grow 400%from US$7 billion

(S$11 billion) currently to US$30 billion (S$49billion) by 2010

GROWING ORGANISED RETAIL SECTOR Source:

The Great Indian Retail Story, Ernst & Young.


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BARRIERS TO GROWTH


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FUTURE


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INTERNATIONAL RETAIL TRENDS


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INDIA vsWORLD

Indian retail is fragmented with over 12 million outlets operating in the country. This is incomparison to 0.9 million outlets in USA, catering to more than 13 times of the total retail marketsize as compared to India

India has the highest number of outlets per capita in the world - widely spread retail network butwith the lowest per capita retail space (@ 2 sq. ft. per person)

Annual turnover ofWal-Mart (Sales in 2001 were $219 billion) is higher than the size of Indian retailindustry. Almost 100 times more than the turnover of HLL (India's largest FMCG company).

Wal-Mart - over 4,800 stores (over 47 million square meters) where as none of India's large formatstore (Shoppers' Stop,Westside, Lifestyle) can compare.

The sales per hour of $22 million are incomparable to any retailer in the world. Number ofemployees inWal-Mart are about 1.3 million where as the entire Indian retail industry employsabout three million people.

One-day sales record atWal-Mart (11/23/01) $1.25 billion - roughly two third of HLL's annualturnover.

Developed economies like the U.S. employ between 10 and 11 percent of their workforce inretailing (against 7 percent employed in India today).

60% of retailers in India feel that the multiple format approach will be successful here whereas inUS 34 of the fastest-growing 50 retailers have just one format

Inventory turns ratio: measures efficiency of operations. TheU.S. retail sector has an averageinventory turns ratio of about 18. Many Indian retailers KPMG surveyed have inventory turns levels

between 4 and 10. Global best-practice retailers can achieve more than 95 percent availability of all SKUs on the retail

shelves (translating into a stock-out level of less than 5 %).The stock-out levels among Indianretailers surveyed ranged from 5 to 15 percent.


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EVOLUTION OF SHOPPERS STOP


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SHOPPERS STOP EXPANSION


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VARIOUS FORMATS IN SHOPPERS STOP


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SPECIALITY CARE


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EVOLUTION OF HOME STOP


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DETAILS ON HOME STOP

RETAIL Framework[1]

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