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 Definition Examples Organized Retail Sector Unorganized Retail Sector Modern form of retailing Traditional form of retailing

Hypermarket, Retail chain Mom n Pop stores, hand etc. cart, pavement vendors etc 3% 35% 97% 6%

Market Share Market Growth Challenges

Poor supply chain Use of labour intensive management, aggressive technology, lack of expansion etc. government support etc.

The organized players

Indian

companies

Foreign

Players

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

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, SHOPPERS 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 Size of organized retail

$300bln $8bln 3%

% share of Organized retail

Source: Economics times retail knowledge series

Major Retail Formats

Department Stores
Well

Hypermarkets
Relatively

Supermarkets and Conv. Stores

established, limited competition Entrenched in Indian Mindset Score on shopping experience Stress on branding Price not critical as they cater to upper income class

new concept, but Main challenge to mom already as big as department and pop stores stores How to compensate for Growing fast, but facilities that mom and pop competition to intensify stores provide namely Home Delivery and Monthly Price Discount and Wide Credit ? Varieties act as key Immense Competitions, attractions building scale to achieve Key to success will be efficient Supply Chains and cost efficiencies will be critical Store locations

Market Profile of Various Formats

Department Stores: Shopper Stop, Lifestyle, Pantaloons Hypermarkets: Big Bazaar, Spencer Supermarkets and Conv. Stores: Subhiksha, Trinethra

Source: India Retail Report, 2007, Merrill Lynch

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

Growth Drivers
Consumption

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

Boom, Higher

Incomes Favorable Demographics Changing Lifestyles and Preferences Real estate boom Manufacturing Reforms Reduction in import dutiesoffering

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 worlds 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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