INDIAN RETAIL INDUSTRY

SARASHWATI SONI
F2
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 RETAILING
According to Kotler: “Retailing includes all
the activities involved in selling goods or
services to the final consumers for personal,
non business use”.

The Indian retail is dotted by traditionally

market place called bazaars or haats
comprises of numerous small and large shops,
selling different or similar merchandise .
 INDUSTRY HISTORY
• Traditionally retailing in India can be traced to
– The emergence of the neighborhood ‘Kirana’ stores catering to
the convenience of the consumers
– Era of government support for rural retail: Indigenous
franchise model of store chains run by Khadi & Village
Industries Commission
• 1980s experienced slow change as India began to open up
economy.
• Textiles sector with companies like Bombay Dyeing,
Raymond's, S Kumar's and Grasim first saw the emergence
of retail chains
• Later Titan successfully created an organized retailing
concept and established a series of showrooms for its
premium watches
 CONTINUED…
• The latter half of the 1990s saw a fresh wave of
entrants with a shift from Manufactures to Pure
Retailers.

• For e.g. Food World, Subhiksha and Nilgiris in

food and FMCG; Planet M and Music World in
music; Crossword and Fountainhead in books.

• Post 1995 onwards saw an emergence of

shopping centers,
– mainly in urban areas, with facilities like car
parking
– targeted to provide a complete destination
experience for all segments of society
• fifth-largest retail destination globally
• US$ 350 billion in 2010 to US$ 637 billion by 2015
• 11.4% growth rate
• contributes to 10 per cent of India's GDP
• provides employment to 8 per cent of India's working
population.
• higher disposable incomes, easy availability of credit and
high exposure to media and brands
• considerably increased the average propensity to
consume over the years
Retail Sector poised for phenomenal growth
Size & Position in the current Scenario

Current Size & Future growth of Organized Retail in India

INDIAN RETAIL SECTOR
 Retailing formats in India
• Malls:
The largest form of organized retailing today. Located mainly in metro cities, in proximity to
urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal
shopping experience with an amalgamation of product, service and entertainment, all under a
common roof.Examples include Shoppers Stop, Piramyd, Pantaloon.

 Specialty Stores:
Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's
Music World and the Times Group's music chain Planet M, are focusing on specific market
segments and have established themselves strongly in their sectors.
 Discount Stores:
As the name suggests, discount stores or factory outlets, offer discounts on the MRP through
selling in bulk reaching economies of scale or excess stock left over at the season. The product
category can range from a variety of perishable/ non perishable goods
 Department Stores:
Departmental Stores are expected to take over the apparel business from exclusive brand
showrooms. Among these, the biggest success is K Raheja's Shoppers Stop, which started in
Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India and even
has its own in store brand for clothes called Stop!.
 Retailing formats in India
 Hypermarts/Supermarkets:
Large self service outlets, catering to varied shopper needs are termed as
Supermarkets. These are located in or near residential high streets. These stores
today contribute to 30% of all food & grocery organized retail sales. Super Markets
can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft
and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong
focus on food & grocery and personal sales.
 Convenience Stores:
These are relatively small stores 400-2,000 sq. feet located near residential areas.
They stock a limited range of high-turnover convenience products and are usually
open for extended periods during the day, seven days a week. Prices are slightly
higher due to the convenience premium.
 MBO’s :
Multi Brand outlets, also known as Category Killers, offer several brands across a
single product
category. These usually do well in busy market places and Metros.
 Some of the Key Players in Organized Retail

.
Key Players of Indian retail market
Key Players of Indian retail market
Key Players of Indian retail market
Key Players of Indian retail market
Players across verticals
Players across verticals
 Increasing penetration of organised retail
• Organised retail in India is largely restricted to the urban and
semi-urban regions, with consumer exposure to modern
retailing formats like malls and stand-alone stores, etc., for
specific product categories.
• Penetration of organised retail is projected to increase to
9.52 per cent in 2010-2011, with revenues from organised
retail touching US$ 43,829 million in 2009-2010.
• Clothing and textiles/apparel segment dominates the
organised retail sector with revenues worth US$ 4.76 billion,
contributing to over 36 per cent of the organised retail pie.
 Increasing penetration of organised retail
• Apparel is one of the fastest
growing verticals, with higher
number of domestic and
foreign brands, and increasing
consumer willingness to pay
for quality.
• Footwear has the highest
organised retail penetration,
primarily due to players like
Bata India Pvt. ltd. and liberty,
with wide distribution network
and customer confidence.
• Retail sector revenues pegged at US$ 460.6
billion by 2010-11
• Organised retail projected to grow to US$ 43.8
billion
• Modern retail is expected to adapt and imbibe
from the traditional formats
• Unorganised formats converging from organised
formats, in the form of mushrooming village
malls
 ADVANTAGE INDIA

REASONS FOR BRIGHT FUTURE OF

RETAIL
 Fast growing economy

• GDP Growth rate is around 9 per cent, the

economy is well poised to continue its growth
story.
• The fast pace of GDP growth is the driving
Indian consumerism; Indian consumers today
are more confident and willing to splurge
 Young India
• Two-thirds of India's
population is under 35 years
age and more than 60 per
cent of the population will
be in the working age group
(15-60) till year 2050.
• The median age of 23,
opposed to the world
median age of 33, sets the
emerging young India apart
• India is home to about 20
per cent of the global
population under 25.
 Untapped market
• Organised retail penetration is on the rise and offers an attractive
proposition for entry of new players as well as scope for expansion
for existing players.
• Diverse needs of the Indian consumer offers a spectrum of
opportunities, spanning from rural retailing to luxury retailing.
• India is home to the largest base of consumers, and a steadily rising
rich and super rich population.
• Impressive retail space availability and growing trend of
consumerism in the emerging cities and small towns add to the
market attractiveness
• Indian Retailing giant, Pantaloon Retail India limited, captures a
mere 0.3 per cent of total market in India, compared to Tesco Plc,
England's 14.3 per cent and Wal-Mart USA’s 20 per cent, signalling
out the large untapped potential
 Abundant Availability of Skilled Labour
• Over 37 million students were enrolled in about
150,000 pre-college institutes and over 11.7 million
in 14,000 higher education institutions in 2005-06.
• Retail management is a sought after education
stream amongst students, with over 15 premier
institutes offering specialised courses in Retail
Management.
• Indian institute of Retail, new Delhi; RPG institute of
Retail Management, Mumbai; and the Retail
academy, Ahmadabad are some of the institutes
focusing on the education needs of the retail sector.
 Low cost operations
• Existing players are increasingly
turning to tier ii and tier iii cities
for retail establishments and
manpower sourcing
• These cities offer significant cost
advantage in the form of low-
cost skilled resources and
attractive lease rentals/real
estate prices.
• With well-educated small town
graduates turning to the urban
cities for employment, these
graduates are ideal candidates
for sales and marketing
executive roles in modern
organised retail formats.
Increase in FDI
 Changing face of the Indian consumerism

• The lifestyle patterns of india’s middle class are getting

redefned with exposure to western values and growing
brand consciousness.
• From a ‘saving’ to a ‘spending’ mindset, the outlook for
• Indian consumerism is buoyant .
• Marked increase in the number of new entrants and
player revenues across all the verticals.
• Due to increased consumer exposure to the latest
trends and brands driven by the mass media, retail
revenues are soaring
 Higher disposable incomes
• Disposable incomes are on the rise
with the economy providing new
avenues of employment in IT/ITES
and other sunrise sectors like
biotech, hospitality etc.
• Employers are offering attractive
compensation packages and
perquisites to skilled Indian
professionals.
• Indians have an ability to spend over
US$ 30,000 a year (PPP terms) on
conspicuous consumption.
• Disposable incomes are expected to
rise at an average of 8.5 per cent per
annum till 2015
 Increasing urbanisation
• India’s urban population is estimated at 286 million,
constituting 27.8 per cent of the total population, as
of 2001
• The urban population is projected to increase to 468
million, constituting 33.4 per cent of the total
projected population of 1,200 million by 2010-11.
• Increase in the number of young employed
executives and the thinning gender divide is
stimulating growth of modern retailing in urban
areas
• Banks and financial institutions have
increased their range and amount of retail
credit and service offerings.
• Average exposure of banks to retail loans was
at 25.5 per cent of total loans in 2005-06.
• Growing acceptance of plastic money across
small and medium
The future of Indian Retail
 First-mover advantage
• More than 72 per cent of India's population resides in small
towns and rural areas with agro-produce retailing forming
the lion’s share of total retail pie in these areas, offering
immense potential for food and grocery verticals and value
retailing
• Players like Reliance Retail, Aditya Birla Nuvo group’s
Trinethra Supermarket, etc. have aggressive plans to tap
these emerging cities.
• Players which have established their presence in the top
metros are planning their establishments in these emerging
cities to gain the first-mover advantage over other entrants.
 Specialty formats
• Formats like ‘Wedding Malls’, which are unheard of in the far west
are making their presence in the Indian market. these stores stock
the complete range of wedding needs from apparel to jewellery.
• Khadi & village industries commission (KVIC) is set to roll out a string
of swanky ‘Khadi Plazas’, which would showcase the handloom
textiles in a new form. over 7,000 existing outlets are to be beefed up
to cater to the changing tastes of the young consumer.
• A latest addition to the diverse formats are the ‘Village Malls’, with
the fair price shops being revamped to cater to larger needs of the
local populations. Gujarat government has spearheaded this initiative
with 512 “malls” launched and another 508 on the anvil
 Increasing Technology Adoption
• With modern retail store formats growing in size, players are
increasingly deploying advanced information technology
tools for managing their supply chain, warehousing and
logistics requirements.
• Retail constituted eight per cent of it export revenues in
2005-06, and was also one of the key sectors driving the
domestic it expenditure.
• Apart from industry giants, the small scale retailers are also
embracing IT solutions to spruce up their operations.
• Big league it firms like IBM India, Oracle, SAP are developing
solutions smaller retailers, such as merchandising solutions,
solutions for store-level point of sale (POS) needs and
hardware requirements, collaboration tools.
 Online Retailing
• Increase in the number of broadband and dial-up
internet connections, limited personal time, increased
use of plastic money, and large young population that
spends a considerable time online are facilitating growth
of online shopping.
• Players like Rediff.com, eBay.in, indiatimes.com were the
first entrants in the Indian online retail space, clocking
impressive revenues through online transactions. Recent
players to enter this niche market include the Pantaloons
Retail India ltd., through its Futurebazaar.com venture
 Rural Retailing
• Rural hypermarkets are growing at a blistering pace,
providing multiple services from creating a platform to buy
and sell farm produce to banks and restaurants.
• ITC Choupal Saagar: currently there are 14 outlets in
operation, and itc plans to increase the number to 700 over
the next 7-10 years. choupal Saagar retails products and also
acts as a procurement hub for ITC’s e-choupals where
farmers are offered better rates for their produce, as
compared with the prevalent mandi rates for the same.
• DScl’s hariyali kisan Bazaar: over 70 outlets and
• proposed to touch 200 over the next 12 months.