Key Drivers of Growth

in Indian Retail

Presented By
Pinaki Basu
200940
 Introduction
An Overview of Indian Retail Industry
Size of Indian Retail Industry :
$ 390 Billion or ₹ 18,10,000 crore
Compounded Annual
Value in ₹ Growth
Billion Rate :
11.74%
Year Organised Unorganised Total
2004 280 9020 9300
2005 375 9925 10300
2006 550 11450 12000
2007 783 12517 13300
2008 1120 13680 14800
2009 1600 14800 16400
2010 2300 15800 18100
CAGR 2004-2010 (%) 11.74
 Growth of Indian Retail - Total

20000

15000
₹ Billion

10000

5000

0
Source: Source: F & R Research
Year
 Organised Retail Growth in India
12

10
₹ in Billion

0
Source: Source: F & R Research
Year
Key Drivers
 Consumer or Demand-Side
Drivers
Personal Consumption as a percentage
of GDP
● Only second to Vietnam in Asia
● Fourth in the world
● China (~35%), Singapore (~45%), Hong Kong
(~50%),
● South Korea (~46%) in 2007
 Consumer or Demand-Side
Drivers
Population as a Growth Driver
Projected Total Population
Projected Population

2000000
1900000
1800000
1700000
1600000
1500000
1400000
1300000
1200000
1100000
1000000
Year
Source: censusindia.gov.in
Consumer or Demand-Side
Drivers
Population as a Growth Driver
Adoption of Nuclear Family
Culture
● Average Household Size in 1991 : 5.57
● Average Household Size in 2001 : 5.36
● Average Household Size in 2011 : 5.02
(Expected)

Source:
censusindia.gov.in
Consumer or Demand-Side
Drivers
Population as a Growth
Driver
Baby Boomer Effect
● Steep Growth in Earning Population (15-60 yrs)
● 335 million people (54 % of total population) in
1975
● 593 million people (58.3% of total population) in
2000
● Growth in Earning Population over 25 yrs: 77%
● ( CAGR of 2.3%)
Source: censusindia.gov.in
● Growth in Indian Population over 25 yrs: 64%
Consumer or Demand-Side
Drivers
Population as a Growth
Driver
Growing Working Women
Population
● Working women can spend 1.3 times more than
housewives
● Working women in 1991: 22%
● Working women in 2001: 26%

Source: censusindia.gov.in
Consumer or Demand-Side
Drivers
Population as a Growth
Driver
Growth in Urban Population
● Urbanization has increased at a rate of 2.7
percent from 1991-2001
● Urban population 2000 : 28.1 crore
● Expected to grow at 2.4%

Source: censusindia.gov.in
 Consumer or Demand-Side
Drivers
Plastic Money Becoming a
Greater Pie of Credit
India is the second fastest growing Financial Cards
market in the Asia - Pacific region.
Growth at 30-35% p.a. from 27mn cards in 2007.
Credit Card Sales: 1.2% in 2008
Credit Card Sales: 1.4% in 2010
(Expected)

Source: Euro Monitor

(www.euromonitor.com)
Consumer or Demand-Side
Drivers
Internet Driving Awareness
and Online Purchases
Internet Users in India
12
10
No. Of People

8
6
4
2
0
Source: Internet World Stats, Angel
Research
Retailer or Supply-Side Drivers

Increased Investments in
Retail
Organised Retail will possibly touch ₹ 2300
bn in 2010

Funds through Private Equity, IPO route

and infusion of funds through warrants

Allow organised players in Retail to expand

Source: Ernst & Young (www.ey.com)

Retailer or Supply-Side Drivers

Increased Investments in
Retail
At an average investment of ₹ 3,000 per sq.
ft. by Retailers, these investments would
translate to 750 mn sq. ft. of Organised Retail
space by FY2010

All key Retailers in India have chalked out

substantial investments over next 3-4 years to
fuel their expansion plans.

Source: Ernst & Young (www.ey.com)

Retailer or Supply-Side Drivers

Increased Investments in
Retail
Pantaloon is expected to invest around ₹
6,000 cr over the next four years to fuel its
three-fold expansion plan and take its total
Retail space to 26mn sq. ft. by FY2012.

Vishal Retail is expected to invest ₹ 3,000cr

to fuel its ambitious five-fold expansion plan to
take its total Retail space to 10mn sq. ft. by
FY2011.

Source: Ernst & Young (www.ey.com)

 Retailer or Supply-Side
Drivers
Tier- II & III cities to fuel
future growth of Modern
Retail

The Top-784 cities in India constitute about 26% of

population
They contribute 35% to Total Retail Sales.
Tier- II and III cities account for 18% of the overall
population
They contribute 22% to the Total Retail sales.
 Retailer or Supply-Side
Drivers
Shortened Supply Chain
benefits consumers
A Traditional supply chain in
India comprises 5-6 levels
Two major disadvantages:
● Cost of the product increases
● Increase in shrinkage
 Traditional v/s Modern supply
chain
Company /
Manufacture Distributor
r 5%
5% Margins
Buying Commissio for
n for
Agent Buying
Distributor
s
Agents
Back
End
Franchisees
30%
Margins
Multi-Brand
Company 30-32% for Outlets
Margins Franchisee
owned for s
outlets / company 35%
owned Margins
large outlets/ for Multi-
organized large Brand
retailers Consumers Outlet
Front retailers Retailers
End
 Traditional v/s Modern supply
chain
Company /
Manufactu
rer
Back
End 38-40%
Margins for
Retailers

Retaile Consum
rs ers
Front
End
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Thank You