Retail Industry

Nitin Kumar Singh (06)

Bhushan Narsinghani (11)
Agenda
 Introduction

 History

 Major Players in retail


 Indian Retail reforms


 Growth of Industry

 SWOT Analysis

 Problems & Prospects
 World’s Biggest
Retailer?
Facts
 Fortune 500 rank 1 – 2008
 Fortune 500 rank 3 – 2009

 CEO: Michael T. Duke

 Biggest employer in the world

 Employees: 2,100,000


$ millions % change from

Revenues 405,607.0 2007
7.1
Profits 13,400.0 5.3
Assets 163,429.0 —
Stockholders' 65,285.0 —
equity
Introduction


 Retail-French word ‘retailer’ (to cut a piece off

or break bulk)


 Retailing involves a direct interface with the

customer and the coordination of business
activities from end to end-right from the
concept or the design stage of a product or
offering to its delivery and post delivery
service to the customer

Retail business Models : Ownership


 Independent Retailer


 Chain retailer or Corporate retail chain



 Business format franchise



 Leased Departments

Retail business Models : MERCHANDISE
OFFERED


 Convenience Store
 Supermarkets

 Hypermarkets

 Specialty Store

 Department Store

 Off Price Retailers

 Category Killers
Source : India retail report 2005
Source India Retail Real Estate,
The road ahead, ICICI white paper pg2­6
ORGANISED RETAILING IN DEVELOPED
COUNTRIES
U S A E U & JA P A N 80%

C H IN A 2 0%
S O U TH K O R E A 15%

IN D O N E S IA 25%
P H ILIP P IN E S 35%
B R A ZIL & A R G E N TIN A 40%

M A LA Y S IA & TH A ILA N D 5 0%
W E S TE R N E U R O P E 70%

0% 20% 40% 60% 80% 100%

History :
EVOLUTION OF RETAIL IN INDIA
 Haats, Mandis and Melas have always been a
part of the Indian landscape


 Mandis are markets set up by the state

government for the sale of agricultural
produce directly from the farmers


 Around 25000 melas and 6800 mandis are

held annually in the country


 The Public distribution system (rationing)

introduced by the British in1946 covering
771 cities/ towns


 It was reintroduced by the Indian govt.1956 to

maintain Inflationary pressures (18000 in
1957 to 51000 in 1961).These shops were
called Ration shops (fair price shops)


 Initial step of liberalization were taken in the

period from 1985-90 restrictions on private
companies were lifted


 One of the pioneers of organised retailing in

Indian textile industry was Raymond’s fabric
stores - 20000 retailers over 250 showrooms
in 120 cities.



Major Players
 Future Group – PRIL

 TATA Group

 RPG Group

 Reliance Retail

 AV Birla Group

 Landmark Group


Indian Retail reforms
Current FDI Policy :


FDI in retail trade is only permitted for ‘Single



brand retail’


FDI upto 51% is allowed in ‘Single brand retail’



with prior govt approval



100% FDI is allowed in wholesale cash and



carry format
Retail entry options
 Strategic License Agreements ( Murjani group)

 Cash and Carry (Metro cash and carry)

 Distribution (International Cosmetic Brand e.g.
Chanel , Dior etc)

 Franchisee route (Pizza hut)

 Manufacturing (UCB , Bata)

 Joint Venture (Bharti-Walmart)

retail trade in India as share of GDP
 2007 : 8-10%


 2009, it rose to 12%



 Expected to reach 22% by 2010

Growth of Indian Retail
 India retail industry is the most promising
emerging market for investment


 Share of organized sector in 2007 was 7.5% of

the total retail market and is expected to
grow 20% of the total market share by 2010
Swot analysis
strength………….
Demographic favor

Rising disposable income

Increase in number of people in earner
category.

Urbanization

Shopping convenience

Low labor cost of skilled ones. 20


Strengths

cont………….
 Changing consumer habits and lifestyles.


 Plastic card revolution.



 Greater availability of quality retail space.

21
Swot analysis
weakness……..
Policy related issues
 - lack of industry status for retail.
 - numerous licence,permits and registration
requirement.


Limited consumer insight

 -lack of detailed region specific customer data.
 -less data on spending pattern.


Inadequate human resources

 -lack of trained personnel at all level.
 -stringent employment and industry laws.
 -fragment approach to human resources.
22
Weakness
cont………..
 Taxation hurdle
 -inconsistent octori and entry tax structure.
 -vat and multiple taxation issues.
 -large grey market presence.


 Underdeveloped supply chain

 -underdeveloped logistics infrastructure.
 -absence of national cold chain networks.
 -lack of national distribution networks and hubs


 Lack of adequate utilities

 - lack of basic infrastructure like power, transport and
communication creates difficulty in sustaining retail 23
operations across the large geographical spread of
country.
Swot analysis

opportunities……..
 Potential for investment.


 Sectors with high growth potential.



 Fastest growing formats.



 Rural retail.


24
Opportunities
cont………..
 Wholesale trading.


 E-retailing


 Retail franchising


25
Swot analysis

threats…………..
 Political issues.

 Social issues.

 Inflation.

 Nostalgia

 Lack of differentiation among the malls that are
coming.

 Poor inventory turns and stock availability 26
measures.
Problems (organized retail)
 Stiff competition from the unorganized sector.
 Shortage of quality real estate and
infrastructure
 Opposition to Foreign Direct Investment Very
high stamp duties
 Issues like Shortage of retail space , Land-use
conversion , Rigid building laws
 Pro-tenancy laws , property disputes .

 Restrictions in Foreign Direct Investment

 Customs duties levied on import of goods .

Conclusion
 Over the last few years, retail has become one
of the fastest growing sectors in the Indian
economy.
 The organized retail however is at a very
nascent stage though attempts are being
made to increase its proportion to US$ 833
billion by the year 2013bringing in a huge
opportunity for prospective players . It is
further expected to reach US$ 1.3 trillion
by the year 2018 at a CAGR of 10%.
 The sector is the largest source of
employment after agriculture, and has
started to penetration into rural India
generating more than 10% of India's GDP.
Sources
 http://www.imagesretail.com/india_retail_report.htm


 www.money.cnn.com
