RETAIL SECTOR

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Indian retail sector accounts for 22 per cent of the country's gross domestic product (GDP)

er

Contributes to 8 per cent of the total employment

Total retail sales in 2010 2011 US$ 395.96 billion

India currently allows 51 per cent FDI in single-brand retail and 100 per cent in wholesale cash-and-carry operation
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nr

The retail industry is divided into organised and unorganised sectors

Current penetration being 5 per cent, which indicates a huge potential for growth

The share of organised retail in total Indian retail trade is projected to grow at 40 per cent per annum

Country USA China India 4/14/12

Organised Retail penetration level in % 85 20 5

Current Retail Growth Projections

10 40 14 16 10 23 16 24 17 0 10 0 8 5 8 0 80 0 60 0 4 4 40 0 2 8 20 0 2 0 3 5 5 5 4 0 6 8 6 0 10 2 10 20 10 00 90 9 14 00 19 02 Rs '000 Cr Rs '000 Cr 93 4

0 20- 4 0 30 20- 5 0 40 20- 6 0 50 20- 7 0 60 2 0 -0 07 8 20- 9 0 80 20- 0 0 91

T ta R ta gM r e ( R '0 0C o l e ilin ak t s 0 r)

Og n e R ta g( s'0 0C) r a iz d e ilin R 0 r

Indian retail industry ~ Rs 990,037 Cr (USD 300 bn), growing at 56% p.a. Organised retail industry ~ Rs 35,000 Cr (USD 7.7 bn), growing at 25-30% p.a. 4/14/12

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TYPES OF RETAILS
Food Books & Magazines Fashion & Clothing Personal Care Optical Consumer Electronics Sport & Leisure Home Click to edit Master subtitle Ware style Footwear & Leather Toys & Games Jewellery & Watches Furniture

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Petrol

or

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Manufactu rers

Organized Sector

Whole seller

Distributor

Retailer 4/14/12

Government Policies

The retail industry in India is growing at a significant pace. However, there are several problems faced by the industry. The major challenges for the organized sector include:

Taxation laws that favor small retailers. Multi-point octroi collection. According to analysts, for this industry to thrive, Indian retailers need to emulate worldwide retail practices such as accuracy in financial reporting, increased levels of corporate governance and greater accountability among employees. Foreign Equity does not go beyond 51 percent.

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Strength
Increasing demand driven by the countrys

young working population

Increase in per capita income which in turn

increases the household consumption

Create win-win situation for all links in value

chain ( suppliers, producers, retailers and customers).

Improvement in the standard of living. Technology intensive industry

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Weakness
Lack of expertise in Supply Chain Management Inadequate Infrastructure Stringent Labour Laws Lack of specialized professionals in Industry Lack of industry status. Government Restrictions on FDI Non-Availability of Government Land.

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Opportunities

Change in consumer behavior pattern and increase in disposable income. It is estimated that 15 million people would be engaged in Retail and Retail support activities by 2012 Indian rural markets offer a sea of an opportunity for the retail sector. Upcoming international Players Healthy prospect for the fashion industry.

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Threats

Indian taxation system favors small retail business. Competition from unorganized Sector to the organized Sector. Middle class Psychology. Increasing Real Estate prices

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et
Challenges
Supply chain management increasing cost Lack of infrastructure Regulations restricting real estate purchases, and cumbersome local laws Lack of trained work force. Low skill level for retailing management. Lack of Retailing Courses and study options Intrinsic complexity of retailing rapid price changes, constant threat of product obsolescence and low margins

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FDI and Retail sector Current scenario

Government has permitted FDI in single brand retail upto 51% in joint venture for the retail of branded products. Brands like Adidas, Nokia; Amway, Samsung, Sony etc are the examples of single brand products which are an outcome of FDI

According to A.T Kearney, a well known international management consultant- India is second most attractive retail destination globally amongst 30 emergent markets.

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Retail Formats

Mom-and-pop stores Category killers Department stores Malls Specialty Stores Discount stores Hypermarkets/ Supermarkets Convenience stores

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Retail consumption by categories

In Rs 00 crores

Indian retail is dominated by food & grocery which contributes > 65% of Rs 9.3t retail market, almost 99% of this is dominated by kirana stores. 4/14/12

APPAREL SECTOR

In India, clothing retail accounts for 36% of organised retail business. According to a report global apparel, accessories & luxuries market is likely to grow by 4.5% annually and Asia Pacific region is anticipated to acquire leadership position by 2011. Apparel sector in India poses a lot of challenges to a marketer. So far Indias share in world apparel trade has been insignificant (less than 3%). World garment trade is estimated at around 195 Billion US$ annually. The Biggest manufacturer & supplier is China producing over 50 billion $, followed by Mexico which produces over 8 billion and followed by many countries like India, Sri Lanka and Bangladesh, being the third place countries making and exporting garments worth 5 - 6 billion $ annually.

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Key players in Apparel Retail

Store name Positioning Format Type Floor size Categories
Pantaloon Mega-mart Lifestyle Westside Wills Lifestyle Max Family store Value for money Multibrand Value pricing Style & affordability Enjoying the Family change Shopping Destination Multibrand

Ex. Arvind Multibrand Mills 5000sq. Ft. 50000sq. Ft.

Ex. Tata trent Ex. ITC gr. 1500030000sq. Ft. Styled clothing

28000sq.ft.

Apparel, Apparel, Apparel, accessories furnishing accessories

Relaxed Footwear, wear, body accessories care product

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ELECTRONIC RETAIL

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KEY PLAYERS
CROMA E-ZONE

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Big players in SUPER MARKET

Future group- big bazaar, food bazaar, pantaloons etc. Reliance retail- marks & spencer RPG group- spencer Tata tesco- star bazaar

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Key Trends

Existing players expanding to smaller towns

Number of existing players like Big Bazaar, Shoppers Stop, Piramyd are planning expansion in smaller cities

Indian business houses in retail

Many business houses are planning retail entry / expansion either on their own or through partnerships

Global Players planning entry in India

Some of worlds largest retailers - evaluating entry in India including Wal-Mart, Carrefour,Tesco, IKEA, Best Buy, Lowe's, Kingfisher Group, Auchan, Woolworth, NTUC etc. Shop Rite, Metro, Marks & Spencers, & Spar are already here Some have setup Sourcing / Back-office centers

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