y

Huge population, increasing per-capita income and changing consumer habits - all these developments have culminated in the booming of the retail sector in India. The majority of retail sales take place through the unorganized sector, which is stores that are popularly known as the kirana, or the mom-and-pop-up stores. The organized retail sector that constitutes highly organized malls presently does not enjoying any significant share of the market revenue but it is estimated that future belongs to the organized retail sector in India. Aruvian's R'search analyzes the Retail Industry in India in a PEST Framework Analysis. A PEST analysis is concerned with the environmental influences on a business. The acronym stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business. Identifying PEST influences is a useful way of summarizing the external environment in which a business operates.

y Analyzing the Indian Retail Industry

The globalization of the Indian Economy has brought forward a change in the Indian consumerism psyche with the consumer becoming more aware of his/her value of money strength and their economic purchasing power becoming more evident than in the previous generations. The concept of product quality and service delivery which were earlier not very engraved in the consumer psyche are now very much demanded and delivered for in the new age format of organized product retailing in the Indian consumer goods market. These changes have led to the overall increase of professionalism in the service delivery as well as the consumer purchase patterns shifting from need only based to extended storage-based bulk purchase characteristics. These have led to the entry and expression of interest by many global retail majors in the Indian organized retail market wherein many products and services are offered to the same consumer at the same location which present multiple attractions to their monthly disposable incomes. The middle class has been a leading adaptor of this change process by its changing lifestyles, strong income growth and changing demographic patterns which are placing the growth projections for this industry comfortably at 25% annually. Today, synergies based on huge consumer bases developed in unrelated industries like telecom to retail are being seen in the Indian market as the combined purchase affinity of the middle class far outstrips the specialist purchase patterns of the higher income strata in the Indian sub continent; with the industry projected to become a US$175-200 billion business by 2016 and the economy playing a comfortable upswing role, the competition in the marketplace is expected to be fierce.

The present scenario of the industry is focused on forward buying of retail real estate in order to reap balance sheet advantages later in the business cycle and also rapid ramping of operations in presently operating outlets in order that the loyalty purchase habits of consumers are built

over a period of time before the world majors enter the market with deeper pockets and buying power. The Asian retailers are not willing to give in an easy competitive fight on their home turf as well as the smart small time mom & pop store retailer known as the kirana store in India is also wizening up to the challenge and building personal relationships apart from increasing the service spectrum like never before. The market in all seems to be ready for a big explosion of intense competitive activity over ridden by social and economic considerations which will make it one of a kind business study in the corporate universe as an economy which did not open up till the early 1990 s where in the industry was dominated by unorganized retailer till then and any kind of central purchase or retail formats where only propagated by the government for which the awareness as well as effort were low. Aruvian's R'search s report - Analyzing the Indian Retail Industry 2007 - on the Indian Retail Industry is an in-depth and comprehensive cross industry review on the Indian Retail Industry which explores the macroeconomic scenario of Indian economy which coupled with growth of GDP led to the shift of consumer purchase patterns and the build up confidence in the retail sector thereby giving shape to the government allowance for FDI in the Indian retail sector. The report provides an overview of the industry along with the investment inflow in the industry which has also been channelized into the rural sector in India by some of the players. The report also attempts to place an estimate on the volume of the unorganized retail sector of India in comparison to the overall industry size. This report follows the changing consumer preferences of the Indian buyer along with the gender driven increase of purchasing power which has taken a different hue among the marketers which are now forced to look at them as an important purchase group and drawing marketing promotions budgets accordingly. The report also envisages to explain the role of the media in influencing the Indian retail market as well as the emergence of luxury brands in the consumer psyche. The report applies the PEST & Porter s Five Forces Strategy Analysis to this dynamic industry which helps to bring out the characteristics of this industry and the forces driving investment infusion or competitor activity in this industry. An in-depth explanation of the industry retail formats segregation is also provided in this report which also comprises of the study of the important regional retail contributors in this sector which are known for either their long standing in the market or any kind of specialty product retail developed over the years, which has differentiated them for the overall market. The report also compares this with the early development of organized retail by the Indian players

and

the

coupled

emergence

of

the

multi-format

retail

in

India.

The recent trends of jumbo sized retailers establishing themselves as super saver locations in the consumer psyche and consumer acceptance of these stores as discount destinations are also explained in this report. The role of e-commerce-based retail though small in volumes but important in terms of growth is also elaborated in this report along with a profiling of the major players in this market. Rural Retailing is elaborated in this report in detail wherein the doubled up sourcing to selling cycles are explained in this report wherein the report also takes up the example of some of the successful rural retail ventures of the Indian market most financed by traditional business houses in India and some of the ventures which also did not succeed in the Indian rural market. A contrasting view of the growth of luxury brands in the Indian market is also explained in this research report wherein the increased consumerism is apparent in the stupendous increase in sales of apparels, lifestyle products etc which have started to carve a profit making niche for themselves as also the trends apparent in these products are elaborated in this report. The factors powering growth and the contesting issues are explained in this report in a macroeconomic scenario wherein the growth opportunities are compared with the issues which are process either legal or union or even logistics oriented. The report also examines the potential development areas in the retail market in India. The process or entry options for FDI into Indian retail industry are examined in comparison to the challenges faced by the entrants in the sector to drive investment into the India market. The report presents some case studies on this crucial issue as well as the further options which are available and the possible role that can be played by private equity contributors. Further, the report draws a profile of the Global Retail Industry and some of the major global players across the world. India s position in the global retail scenario is also explained in this report. Retail not being limited to only consumer goods is further explored in this report in the books music and gift retail industry which have picked up pace in transforming from being isolated businesses to being integrated retail locations for all these products which have received good consumer response as explained in this report by way of analysis of the leading participants in this Industry. Food being a major driver of retail consumption globally has also seen growth and entry of various global fast food chains into India backed by slowly building weekend spending patterns in the metros as well as acceptance of these food habits in the Indian palette. The major industry contributors in this sector are analyzed by this report.

The report further analyses the retail push in areas like Fashion Apparel, Consumer Electronics, Entertainment Retail, Eyewear Retail, Fitness & Personal Care, Food & Grocery Retail, Footwear Retail, Fuel & Forecourt Retail, Health & Pharmaceutical Processes, Home & Office Furniture Furnishings Retail, Jewelry Retail, Telecom Retail, and Timewear Retail. The report further provides the future perspective of the Indian retail industry which is set to boom and present huge opportunity or renewed growth cycles to the world majors of retail who now look at India as a future destination which will sustain and lead new revenue opportunities.

Indian Retail Industry 2011

The Indian retail industry has grown at a Compounded Annual Growth Rate (CAGR) of 13.3% for the period FY06-10. The growth in the Indian economy since the last decade and the change in consumption pattern of the Indian populace in terms of higher proportion of middle class population, greater proportion of working women etc can unarguably be linked to the growth of the Indian retailing industry. Of all the segments in retail, the contribution of food & grocery remained the highest at 58% of the total retail sales during FY10, with the clothing & footwear segment remaining the second largest contributor occupying 10% of the total retail pie during the same period. However in terms of growth figures, the entertainment, books & sports goods equipment segment outperformed the other retail segments registering a CAGR of 22.5% during the period FY06-10. In spite of the growth, the industry remains largely fragmented with the organized retailing still at a nascent stage. In case of overall retailing revenues, the food & grocery segment accounted for the highest share at 58% of the total retailing pie aggregating Rs.11.49 lakh crore during FY10. In the organised retailing, the food & grocery segment stood as the second largest contributor with revenues aggregating Rs.24,273 crore during the same period. However, the organised retail penetration of other segments such as clothing & footwear, entertainment & books and furniture & furnishing surpassed that of the food & grocery segment. The Indian retail industry has witnessed rampant growth over the last decade. However, during the economic recession since the latter half of FY09, the retailers especially in the organised segment suffered a set-back in the form of declining revenues and halt in their capex plans. The unemployment situation, further aggravating the fear of job losses during the recession, resulted in muted consumer spending with the consumers choosing to spend on necessities rather than discretionary items; the industry thus witnessed decline in footfalls, conversion rate, which was especially apparent in the decline of same store sales. The slowdown in consumer spending led to the inventory being stacked up resulting in a low inventory turnaround ratio, registering a decline to 4.3 times during FY09 from 4.8 times during FY08. Before the onset of recession, the large scale expansion plans of the Indian retailers warranted an increase in inventory and greater store operating expenses in the form of rentals and staff expenses thus increasing the working capital requirement. However with the economic recession in effect, the retailers were faced with a liquidity crunch owing to difficulties in raising

funds both from the equity as well as debt markets. Additionally, the funds raised during the economic boom attracted higher interest rates thereby affecting the retailers ability to service the interest as well as principal repayments during the downturn. The total interest outgo of the retailers as tracked by CARE Research registered a y-o-y growth of 78.6% during FY09. Even though, post recession, the industry is witnessing a gradual turnaround, it is met by a few stumbling blocks that constitute the challenges ahead for the Indian retail industry viz. higher store rentals as compared to retailers globally, taxation & other policy regulations, inefficiencies in supply chain management and higher rate of shrinkage. In spite of the said challenges, the authors expect the Indian retail industry to grow on the backdrop of expectant rise in the countrys Gross Domestic Product (GDP) during the period FY11-FY13. The rise in income level of the Indian populace, in turn, is expected to fuel the domestic consumption ultimately resulting in higher revenues for the Indian retailers. Importantly, the authors expect the penetration of organised retail in the total retail pie to increase by FY13 owing to the expanding reach of the retailers to tier-II & III cities accompanied by higher consumer spend on discretionary items. Also, in an attempt to increase margins, the authors expect the retailers would restore to adapting measures such as increasing the share of private labels in the total store sales, reducing store level operating expenses etc. The report on the Indian retail industry provides a comprehensive overview of all the above mentioned parameters with detailed forecasts. The global economic recession and the corresponding decline in retail sales volumes since the latter half of FY09 adversely affected the prospects of the Indian retail industry. The growth in the Indian retail story witnessed in the form of huge capex plans, growing footfalls etc during the pre-recession period made way for adherence to austerity measures by the retailers such as store closures/re-location of stores, employee layoffs and the curbing of other operating expenses during the period spanning the economic recession. However, the gradual revival in the global economy and the improving unemployment situation since H2FY10 has correspondingly led to the revival in the confidence of the Indian consumers, ultimately resulting in greater footfalls, higher conversion and growth in same-store sales (SSS) as compared to a year ago. The authors report on The Indian Retail Industry seeks to answer queries such as: Indias expected Private Final Consumption Expenditure (PFCE), the expected size of Indian retail & organised retail industry. To what extent would the penetration of organised retail increase from the current level? What are the challenges the industry is likely to face in the foreseeable future? With Indian retail data spanning from FY05-10 garnered through a well-established network of primary and secondary sources and the authors outlook on the industry for the period FY11FY13 on retail sales, organised retail penetration etc, the report is indispensable for any company in the retail industry, banks/Financial Institutions (FIs), policy makers, research & academic organizations, other international and national agencies etc. Additionally, the four quarterly updates from the date of subscription accompanying the said report would form a potent tool for the subscribers to keep abreast of the happenings in the industry.

Indian Retail Industry: Strategies, Trends and Opportunities 2007

Retail is Indias largest industry, accounting for over 10 per cent of the countrys GDP and around eight per cent of the employment. Retail industry in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. But because of the heavy initial investments required, break even is difficult to achieve and many of these players have not tasted success so far. However, the future is promising; the market is growing, government policies are becoming more favorable and emerging technologies are facilitating operations. Retailing in India is gradually inching its way toward becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector in India. Some Key Facts:

- Retail is Indias largest industry, accounting for over 10 per cent of the countrys GDP and around eight per cent of the employment The market size of Indian retail industry is about US $312 billion

- Organised retailing comprises only 2.8 per cent of the total retailing market and is estimated at around US$ 8.7 billion - The organised retail sector is expected to grow to US $ 70 billion by 2010