Transcript Source: Images Retail

Overview of Retail
in India
KRITHIKA G.K
Asst. Professor
FMS
Evolution of Retail in India
• Barter System
• Unique needs, due to size &
complexity
• Special feature - Haats, Melas &
Mandis
Haats
• Periodic markets (fixed times & locations)
• Public gathering of buyers & sellers
• Avg.sale per day: Rs.2.25 lakhs
• 300+ sale outlets per haat
• 4500+ visitors per haat
• Rs.900 avg. sale per outlet
• Approx. 20-50 villages
Source: BW Marketing Whitebook, pp.99-101)
Melas
• Fairs (commodity / religious)
• 25000 annual melas across India
• Avg. outlets – 800
• Avg sale per mela – Rs 143 lakh
Source: BW Marketing Whitebook, pp.99-101)
Mandis
• Markets set up by State Govt.
• Direct sale of agricultural produce
from farmers
• Avg. 600 mandis
• Population catered to 1.36 lakhs
Source: BW Marketing Whitebook, pp.99-101)
India’s Largest Retail
Chains
PDS
(Rationing System – British –
WW )II
Post Offices
463,000
KVIC (1957)
7,000
CSD Stores
(Canteen Stored Dept.)
3400
Source: Business World, Marketing Whitebook, 2005, pp.238)
160,000
Traditional Formats
•Itinerant Salesman
•Haats
•Melas
•Mandis, etc.
Established Formats
Emerging Formats
•Kirana Shops
•Convenience /
Departmental Stores
•Company / Multi-brand
Showrooms
•PDS/Fair Price Shops
•Co-operative Stores
•Pan/Beedi Shops
•Exclusive Retail Stores
•Hyper Markets
•Internal Retail
•Malls/Speciality malls
•Multiplexes
•Rural Oriented Formats
•Fast Food Outlets
•Service Galleries
•Etc.
Source: Retailing Management, Swapna Pradhan, Retail in India. Pp.23
Indian Retail
Industry Overview….
• Changing customer profile
• Changing Income Profiles
• Diminishing difference b/w Urban & Rural
• Change in Consumption Patterns
• Average consumer today is richer, younger and more
aspirational in his / her needs
• Explosion of organized retail formats
• Investment in retail more than 12 times that was
invested during the last one decade.
(Source: KPMG India analysis & http://nitine.blogspot.com/2008/03/retailing-rural-marketingindia-v.html)
• Retailing in India is was estimated to be a US$ 200
billion industry, of which organized retailing made up 3
percent or US$ 6.4 billion.
• By 2010, organized retail is projected to reach US$ 231
billion.
Retail landscape in India
• Indian retail market is US$ 332.8 billion (Rs
1330,000 crore)
• Growing at 10.8 % p.a.
• Expected to grow to US$ 590 billion in 201112 @ 13%p.a. (Source:http://www.indianrealtynews.com/retailmarket/indias-retail-business-estimated-to-touch-590-billion-in-2-years.html – 13/07/09)
• Organised retail – 5.9% (US$19.6 billion) expected to touch US$ 57.5 billion in 2010 i.e
13% of the total retail market.
Source: Images F&R Research Estimates; Images Retail; May 2008
Investment Climate
• Economic Growth of 9% p.a
• Can exceed China by 2015; Britan by
2022; Japan’s by 2032
• Can become third largest economy
after US & China
• Second largest economy after China by
2050
Source: Images F&R Research Estimates; Images Retail; May 2008
Contd……
• FDI inflow in 2007 – US$ 19.16 billion
• 72% increase from US$ 11.12 billion in
2006
• US$ 5 billion into retailing Industry
(infrastructure, systems & shop-fit)
• Largest English speaking population than
whole of Europe
Source: Images F&R Research Estimates; Images Retail; May 2008
Cont’d…
• 300 million odd – middle class
• According to estimates 70 million Indians earn
a salary of over USD 19,500 p.a.
• Middle class predicted to rise to 140 million by
2011
• Expected consumers to swell to 600 million
• Will establish India as one of the largest
consumer markets of the world.
Source: Images F&R Research Estimates; Images Retail; May 2008
During the current financial
crisis….
• Dip in growth rate of GDP from an avg.
of over 9% in the last three fiscal yrs.
To 6.7%
• Sharp rise in wholesale price index to
nearly 13% in Aug 2008 & sharp fall to
close at)0% in March 2008
• Gross capital flows peaked at 9% in
2007-08 before the global financial
crisis
Source: Images Retail; May 2009
• India’s Retail Trade Not To Be
Opened Any Further: Govt.
(http://www.indianrealtynews.com/retail-market/indias-retail-trade-not-to-beopened-any-further-govt.html - 18/07/09)
The Retail Revolution
• 15 million retailers & a rapidly evolving
retail market
• 280 hypermarkets, 3200 supermarkets,
400 departmental stores and 1200
mega speciality stores & 20000
exclusive brand outlets across various
retail categories by 2011
• 200 million sq ft. of gross leasable
quality retail space (GLA) in Malls by
2011
Source: Images F&R Research Estimates; Images Retail; May 2008
…..
• Most of retail growth may come from
more than 1000 tier II towns of India.
• Striking features of Indian Retail:
• At Subhiksha, 40 per cent of revenues and space
come from cities that are not state capitals.
• At Vishal Megamart, 80 per cent of revenues come
from tier II and III cities
• Around 70-75 per cent of visitors end up buying from
retail outlets in smaller places, whereas, in large
cities, it is around 50-55 per cent
• Retail Operations in smaller cities result in extra 3 – 4
percent margin
(Source:http://nitine.blogspot.com/2008/03/retailing-rural-marketing-india-v.html; Nitin Srivastava)
Rural Retailing
• Corporate retailers (ITC, Godrej, Reliance,
AV Birla, Pepsico) – Farm Linkages
• Loan wavier from Indian govt. of
Rs.60,000 to farmers to lighten their debt.
• Consumer spending – urban : rural = 9
:11 i.e Rural India accounts for 55% of
pvt. Retail consumption.
• Half of growing retail market in Rural India
Source: Images F&R Research Estimates; Images Retail; May 2008
• New Assocham study “The Rise of Rural
India” – rural retail mkt. = 40% of total
size of retail market in India
• Growing at 10% of India’s GDP
• Currently 10,000 of the 6 lakh+ villages
have access to organised retail
Source: Images Retail; May 2009
Rural Marketing
According to National Council of Applied
Economic Research (NCAER) Reports –
• There are 720 million consumers in 627,000
villages.
• 17% of these villages account for 50% of rural
population & 60% of rural wealth!
• Leading to ‘bottom of the pyramid’ marketing
• Egs. DCM Hariyali Kisaan Bazaar, ITC Chaupal
Sagar, Godrej Aadhar, Tata Kisan Sansar,
Reliance Fresh, Naya Yug Bazar etc.
Source: Images F&R Research Estimates; Images Retail; May 2008
Indian Retail
Market Size
Overall Retail Market
• Overall Retail market size – US$ 332.8b
(Rs.1330,000cr)
1. Food & Grocery – 59.5% (Rs.792,000cr)
2. Clothing & Accessories – 9.9% (Rs. 131,300cr)
3. Catering Services – 5.4% (Rs. 71,300cr)
4. Jewelry (Rs. 69,400cr)
5. Consumer Durables – (Rs.57,500cr)
6. Health & Pharma – (Rs 48,800cr)
7. Entertainment – (Rs. 45,600)
8. Furniture, furnishings & kitchenware – (Rs.45,500cr)
9. Mobiles & Accessories - (Rs.27,200cr)
10.Leisure Retail - (Rs.16,400cr)
11.Footwear - (Rs.16,000cr)
12.Health & Beauty Care Services - (Rs.4,600cr)
13.Watches & Eyewear - (Rs.4,400cr)
Source: Images F&R Research Estimates; Images Retail; May 2008
Overall Retail Market
• Fastest Retail Growth (2007)
over the previous year in the
following categories …
1. Mobile & Accessories – 25.6%
2. Out-of-home Food (Catering Services)
– 25.1%
3. Books, Music & Gifts – 23.3%
Source: Images F&R Research Estimates; Images Retail; May 2008
Organized Retail Segment
• Organized Retail Size – US$ 19.6b
(Rs. 78,300cr)
1. Clothing & Fashion Accessories – 38.1%
(Rs.29,800)
2. Food & Grocery – 11.5% (Rs.9,000cr)
3. Footwear – 9.9% (Rs. 7,750cr)
4. Consumer Durables – 9.1% (Rs. 7,100cr)
5. Out-of-Home Food (Catering Services )
6. Services & Furniture
7. Furnishings & Kitchenware …
Source: Images F&R Research Estimates; Images Retail; May 2008
Organized Retail Segment
•
Fastest Growth in 2007 over previous
yr. recorded in…
1. Tiny Health & Beauty Care Services – 65% (Rs.
660cr)
2. Entertainment – 53.8%
3. Mobile & Accessories – 55.2%
4. Food & Grocery – 55.2%
Source: Images F&R Research Estimates; Images Retail; May 2008
Other Emerging Sectors……
• Jewelry Retail (Branded)
• Footwear Retail
• Time Wear
• Eye Wear
• Fuel / Petrol Retail
Comparative Growth in Both
Categories
2006
Overall
Retail
Market
26.1%
Organized
Retail
Segment
41.7%
2007
25%
37%
Source: Images F&R Research Estimates; Images Retail; May 2008
“ India is an important growth
market with tremendous longterm potential for our
company……”
Richard H. Lenny
President & CEO
The Hershey Company