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GROWTH IN CONSUMER CONSUMPTION

Consumption will grow 4x over 2005 2025. Urban India will account for more than two-thirds of this growth as urban household income will grow 3.3x over the same period.

Aggregate annual consumption


(Bln, Indian rupees, 2000)
80,000 71,504 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 1 All India consumption 2005
Source: MGI India Consumer Demand Model, v1.0

35,913

18,896

16,695

Rural consumption growth

Urban consumption growth

All India consumption 2025

GROWTH IN CONSUMER CONSUMPTION


Consumption will grow 4x over 2005 2025. Urban India will account for more than two-thirds of this growth as urban household income will grow 3.3x over the same period.

Aggregate consumption per Urban Household


(Indian rupees, 2000)
400,000 350,000

378,170

300,000
250,000

6.1%

208,406 200,000 150,000 100,000 65,416 50,000 0 1 1985


Source: MGI India Consumer Demand Model, v1.0

2.9%
86,351

115,620

1995

2005E

2015F

2025F

URBAN CLASSIFICATION AND FOCUS OF ORGANIZED RETAIL


Urban areas are classified into four types depending on population. Traditionally, organized retail chains focus on tier 1, 2 and tier 3 (limited). There is a clear gap when it comes to Tier 4 cities.

Bangalore Hyderabad, Mumbai Kolkata Delhi Chennai Ahmadabad Pune

Surat Kanpur Nagpur Lucknow Jaipur Kochi Vadodara Indore

Ludhiana Madurai Bhopal Patna Nasik, Agra Varanasi Rajkot

Tiruchirapalli Amritsar Faridabad Aurangabad Allahabad Gwalior Jodhpur Raipur Bhubaneswar

Rohtak Rurkela Udaipur Anand Faizabad Hassan Shimla Roorkee Shillong

Tier 1
Major cities

Tier 2
Mainstream cities

Tier 3
Climbers

Tier 4
Large towns

8 cities
Population > 4 million

26 cities
Population > 1 million

33 cities
Population > 500,000

33 cities
5,094 towns

* Population for each city estimated using the average urban household size Source: The Great Indian Middle Class, NCAER; MGI India Consumer Demand Model (v1.0); MGI analysis

POTENTIAL IN TIER 4 CITIES


40% of total disposable income is generated in Tier 4 cities

Total Households (million, (share))

Average income per household (1000, Indian Rupees)


186

Total disposable income (Bin, Indian Rupees (share))

16(29%)

Tier1 Major cities

3,034 (39%) 129

Tier1 Major cities

Tier1 Major cities

8(15%)

Tier2 Mainstream cities

1,064 (14%)

Tier2 Mainstream cities

136

Tier2 Mainstream cities

670 (9%)

Tier3 Climbers

Tier3 Climbers

114

Tier3 Climbers

27 Tier4 Large towns Tier4 Large towns

3,009 (39%)

Tier4 Large towns

Note: Disposable Income estimated using income distribution of households from NCAER and model estimates of average household income; Figures are rounded to the nearest integer and may not add up to 100% Source: The Great Indian Middle Class, NCAER; MGI India Consumer Demand Model, v1.0; MGI analysis

SUMMARY OF OPPORTUNITY
This leaves a huge unmet demand in serving the needs of affluent customers in smaller towns.
Existing mom-and-pop stores are not able to meet the demands of affluent customers in towns. Organized retail chains are yet to penetrate these towns. Ecommerce is not yet a viable channel given that customers are not tech savvy, psychological barriers and limited infrastructure.

FABMART TARGET SEGMENT


The key focus of FabMart by MRPL is to address the needs of affluent customers in Tier 3 and 4 cities. Focus of FabMart by MRPL
Deprived
FabMart by MRPL by MRPL Organized retail

Key success factors to serve affluent customers in towns


1 Product availability A wide range of products and services should be available.

Aspirers

2
3 4

Convenience The process of shopping should be convenient and fun.


Confidence Customer should trust the seller and the brand. Operational control A high quality of customer experience needs to be ensured with a tightly managed service delivery model. Lean & scalable model Since volumes will be low in any given town, the model should be lean but highly scalable.

Strivers

Seekers

Globals

Tier 1

Tier 2

Tier 3

Tier 4

COMPETITIVE ANALYSIS
In the target towns E-commerce
Mom & Pop stores The typical mom-and-pop store serving customers in the town Pros: Convenience Trust Instant gratification Large format retail Large format retail stores that are occasionally seen in some tier 3/4 towns Pros: Convenience Trust Instant gratification Variety and deals Cons: Is not present in most of the target towns E-commerce chains such as Flipkart, Myntra etc.

Shopping from adjacent cities


Customers going to the nearest city to buy goods that are not normally available Pros: All the benefits of a typical LFR store Cons: Involves prior planning and travel Returns are not possible if the city is located at a distance

Comments

Pros: Variety and good deals Cons: Various links in the value chain (from a small
town point of view)

Value proposition to the customer

Cons: Limited variety May not be the best deals

are not yet mature i.e. Technology, Logistics, Payments etc., Trust deficit Familiarity with online shopping required No touch-and-feel experience Low-Medium

Comparative

Threat

Low-Medium

Low

High

ABOUT FABMART BY MRPL


FabMart by MRPL aims to simplify shopping for customers in smaller towns in India while offering them an unmatched online shopping experience. We are the only company in India that is exclusively focused on catering to customers in small towns by bringing in a wide range of products offered by a multitude of brands. We want to combine our industry expertise, technology know how to offer our customer in towns two things: Fastest and best e-commerce experience, and Timely delivery in the towns.

The Team
Alphonse Reddy Founder & CEO,
12 years industry experience spanning sales, marketing, strategy and finance. BE (BITS, Pilani) and MBA (INSEAD Business School)

Investors/Advisory Team
Hemu Javeri Executive Director, Forum Synergies, a $150m PE fund.
Previously CEO of Madura Garments, Nike and Home Solutions.

Anand Morzaria

CEO of Pennywise Solutions.


MSc Finance (BITS, Pilani)

Ashish Agarwal

Investment Director, Navis Capital,


a $3b PE fund. MBA (INSEAD Business School)

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