Organized Retail

The Opportunities Ahead

Retail – the largest private industry in world economy

Sales (USD Trillion) 1999

Retail 6.6
Financial services 5.1
Construction / Engineering 3.2
Packaged goods 2
Chenmicals 1.4
Energy 1.2
Electronics 1.1
Automotive 1
telecom 0.8
Pharmaceuticals; diagnostice 0.3
Source : Euromonitor, European Chemical Industry Council: Automotive News; Wall Street Journal; Chemical market
Reporter; IDATE; Global Vantage
Retailing – the largest private industry in the world

• Over 50 of the Fortune 500 companies are retail

companies.
• 25 of the Asian top 200 companies are retail
companies.
• The world’s largest company is a retail company.
(Wal-Mart – last valued at Rs 1,091,250 crore)
 Current Retail scenario in India

• Retail industry accounts for 35% of our GDP

• Estimated industry size - USD 205 bn (INR 230,000 cr) in
2004.
• Highest number of outlets per capita - 12 million outlets
• Lowest per capita retail space - 2 sft per person as
compared to 16 sft per person in USA
• Only 4% of the country’s outlets are larger than 500 sft

India’s retail setup is therefore crowded with small outlets, largely

disorganized and primarily owner managed

Source: KSA Technopak

 Organized Retail

Organized Retail arrived in India in the 90’s

• 1999 Rs 550 Crore
• 2002 Rs 4,000 Crore
• 2004 Rs 28,000 Crore
• 2005 Rs 35,000 Crore
Organised Retail Penetration
 Examples of Growth in Emerging Markets

Years taken for organized retail to grow from <5% to over 20%

INDIA IS STILL AT 2.5%

Source : MG1, team analysis
 Forecast 2010
• Organized retail is expected to grow at 30% - 35% p.a. to become USD
24 bn (INR 100,000 cr) by 2010

• Organized Retail Penetration (ORP) will increase from less than 3% in

2005 to 8% by 2010

• FDI in real estate will accelerate pace of development of retail

infrastructure

• Investments in organized retailing are estimated to touch USD 4,000 Mn

(INR 20,000 cr) by end of 2010

Source: KSA Technopak, HSBC Report

Development Curve of Organised Retail
 Growth Drivers - Young & rapidly evolving
consumers

India is one of the most

youthful countries in the
world with 53% of the
population less than 25
yrs of age

Within a decade the number of people in age group of 20 – 49 would

increase 30% from 395mn in 2000 to 510 mn in 2010
 Growth Drivers – Middle Class Population

Currently estimated at 92 Mn the middle class (family income between INR

200,000 – 10,00,000 p.a.) is expected to be around 153 Mn by 2010
 Growth Drivers – Retail Infrastructure

• India will have 225 malls by 2007 spread over 50 cities

• Relaxation in FDI in Real Estate to give further impetus

• Real Estate Mutual Funds ( REMFs) & Real Estate Investment

Trusts ( REITs) comes to India
Organized Retail

Emerging Opportunities
 Retail – Largest Employer in the World

Increased employment opportunities

- The annual employee turnover of

Wal-Mart is more than the entire
workforce of General Motors

- 18% of the US workforce is

employed in retail
 Socioeconomic Impact of McDonalds on the
US Job Market

McDonalds captures 1 out of every 6 restaurant visits in the US market

• Employs more than 5,00,000 people

• Largest employer of High School Students
• 12.5 % of the US workforce has worked for McDonalds
• 1 out of 15 American got his/her 1st Job at McDonalds
• Nations largest Job Training Organisation -Bigger than
the US Army – teaching the future US workforce “ work
routines,job discipline and organisational teamwork
Retail – Opportunities for Entrepreneurs

- World of Franchising

- Specialized retail formats

Bangles, Candy, Kite, - opportunities are
immense !!