Indian Retail Scenario

The retail scenario is one of the fastest growing industries in India over the last couple of years.
India retail sector comprises of organized retail and unorganized retail sector. Traditionally the
retail market in India was largely unorganized; however with changing consumer preferences,
organized retail is gradually becoming popular. Unorganized retailing consists of small and
medium grocery store, medicine stores, subzi mandi, kirana stores, paan shops etc. More than
90% of retailing in India fall into the unorganized sector, the organized sector is largely
concentrated in big cities. Organized retail in India is expected to grow 25-30 per cent yearly and
is expected to increase from Rs35, 000 crore in 2004-05 to Rs109, 000 crore ($24 billion) by
2010.

Quick facts on Indian Retail sector

 Indian Retail sector is the fifth largest global retail destination.

 India retail market is dominated by the unorganized sector.

 The top five companies in retail hold a combined market share of less than 2%.

 The Indian retail market has been ranked by AT Kearney's eighth annual Global Retail
Development Index (GRDI), in 2009 as the most attractive emerging market for
investment in the retail sector.

 Currently the share of retail trade in India's GDP is around 12 per cent, and is estimated
to reach 22 per cent by 2010.

 According to Government of India estimate the retail sector is likely to grow to a value of
Rs. 2,00,000 crore (US$45 billion) and could yield 10 to 15 million retail jobs in the
coming five years; currently this industry employs 8% of the working population.
  India continues to be among the most attractive countries for global retailers. According
to the Department of Industrial Policy and Promotion, approximately US$ 47.43 million
was the amount of Foreign Direct Investment (FDI) inflow as on September 2009, in
single-brand retail trading.

More than 80% of the retail sector in the country is concentrated in the large cities. A study
reveals that among the more than 20 locations, for organized retail in India, Mumbai was found
to be the most preferred location followed closely by Bengaluru in the second position.

Key Players in Indian Retail Sector

 AV Birla Group has a strong presence in apparel retail and owns renowned brands like
Allen Solly, Louis Phillipe, Trouser Town, Van Heusen and Peter England. The company
has investment plans to the tune of Rs 8000 – 9000 crores till 2010.

 Trent is a subsidiary of the Tata group; it operates lifestyle retail chain, book and music
retail chain, consumer electronic chain etc. Westside, the lifestyle retail chain registered a
turnover of Rs 3.58 mn in 2006

 Landmark Group invested Rs. 300 crores to expand Max chain, and Rs 100 crores on
Citymax 3 star hotel chain. Lifestyle International is their international brand business.

 K Raheja Corp Group has a turnover of Rs 6.75 billion which is expected to cross
US$100 million mark by 2010. Segments include books, music and gifts, apparel,
entertainment etc.

 Reliance has more than 300 Reliance Fresh stores; they have multiple formats and their
sale is expected to be Rs 90,000 crores ($20 billion) by 2009-10.

 Pantaloon Retail has 450 stores across the country and revenue of over Rs. 20 billion and
is expected to touch 30 million by 2010. Segments include Food & grocery, e-tailing,
home solutions, consumer electronics, entertainment, shoes, books, music & gifts, health
& beauty care services.
Retail and recession

The global economic slump has had its impact on the India retail sector. One of the earliest
players in the Indian retail scenario Subhiksha's operations came to a near standstill and required
liquidity injection. Vishal Retail secured corporate debt restructuring (CDR) plan from its
lenders while other players like the Reliance Retail run by Mukesh Ambani and Pantaloon led
Kishore Biyani by went slow on expansion plans and even scaled down operations. However,
during the last quarter a bit of confidence was restored as the economy showed signs of growth.

Future Trends

 Lifestyle International, a division of Landmark Group, plans to have more than 50 stores
across India by 2012–13.

 Shoppers Stop has plans to invest Rs250 crore to open 15 new supermarkets in the
coming three years.

 Pantaloon Retail India (PRIL) plans to invest US$ 77.88 million this fiscal to add up to
existing 2.4 million sq ft retail space. PRIL intends to set up 155 Big Bazaar stores by
2014, raising its total network to 275 stores.

 Timex India will open another 52 stores by March 2011 at an investment of US$ 1.3
million taking its total store count to 120. In the first six months of the current fiscal
ending September 30, 2009, the company has recorded a net profit of US$ 1.2 million.

 Australia's Retail Food Group is planning to enter the Indian market in 2010. It has plans
to clock US$ 87 million revenue in five years. In 20 years they expect the India
operations to be larger than the Australia operations.

 ndia is one of the most attractive destinations for retailers from all across the globe.
Thanks to the entry of corporate, changing consumer behavior & lifestyle, increasing
influence of western culture and rising income, the Indian retail industry has seen
phenomenal growth in the last five years (2001-2006) and organized retailing has finally
emerged from the shadows of unorganized retailing and is contributing significantly to
the growth of the overall retail sector, according to “Booming Retail Sector in India”, a
new market research report by RNCOS. The research report helps the client to analyze
the opportunities and factors that will make the Indian retail industry a success.
 Key Findings

 - Organized retail market in India is expected to reach US$ 50 Billion mark by 2011.
- Number of shopping malls is expected to increase at a CAGR of more than 18.9% from
2007 to 2015.
- Rural market is projected to dominate the retail industry landscape in India by 2012
with total market share of above 50%.
- Organized retailing of mobile handset and accessories is expected to reach close to Rs.
5000 Crore by 2010.
- Driven by the expanding retail market, third party logistic market is forecasted to reach
US$ 20 Billion by 2011.
- Apparel, along with food and grocery, will lead the organized retailing in India.

 Key Issues Analyzed

 - What is the market size and scope of the retail industry in India?
- What are the current market trends?
- What are the growth prospects and issues related to the industry?
- What is the segment-wise size of the organized market and what are the growth
prospects of the market?
- What are the opportunities and challenges faced by the industry?
- Who are the major players in the Indian retail industry and what are the latest
developments?

 Key Players Analyzed

 This section covers the key players currently operating in the Indian retail industry,
including Subhiksha, Reliance Retail Ltd, Pantaloon Retail (India) Ltd., etc.

 Research Methodology Used

 Information Sources
Information has been sourced from books, newspapers, trade journals, and white papers,
industry portals, government agencies, trade associations, monitoring industry news and
developments, and through access to more than 3000 paid databases.

 Analysis Method
The analysis methods include ratio analysis, historical trend analysis, linear regression
analysis using software tools, judgmental forecasting and cause and effect analysis.

 For FREE SAMPLE of this report visit: http://www.rncos.com/Report/IM112.htm

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 About RNCOS:
  RNCOS, incorporated in the year 2002, is an industry research firm. We are a team of
industry experts who analyze data collected from credible sources. We provide industry
insights and analysis that helps corporations to take timely and accurate business decision
in today’s globally competitive environment

Retail Sector in India

Retail and real estate are the two booming sectors of India in the present times. And if industry
experts are to be believed, the prospects of both the sectors are mutually dependent on each
other. Retail, one of India’s largest industries, has presently emerged as one of the most dynamic
and fast paced industries of our times with several players entering the market. Accounting for
over 10 per cent of the country’s GDP and around eight per cent of the employment retailing in
India is gradually inching its way toward becoming the next boom industry.

As the contemporary retail sector in India is reflected in sprawling shopping centers, multiplex-
malls and huge complexes offer shopping, entertainment and food all under one roof, the concept
of shopping has altered in terms of format and consumer buying behavior, ushering in a
revolution in shopping in India. This has also contributed to large scale investments in the real
estate sector with major national and global players investing in developing the infrastructure
and construction of the retailing business. The trends that are driving the growth of the retail
sector in India are

 Low share of organized retailing

 Falling real estate prices
 Increase in disposable income and customer aspiration
 Increase in expenditure for luxury items

Another credible factor in the prospects of the

retail sector in India is the increase in the young
working population. In India, hefty pay-packets,
nuclear families in urban areas, along with
increasing working-women population and
emerging opportunities in the services sector.
These key factors have been the growth drivers
of the organized retail sector in India which now
boast of retailing almost all the preferences of
life - Apparel & Accessories, Appliances,
Electronics, Cosmetics and Toiletries, Home &
Office Products, Travel and Leisure and many more. With this the retail sector in India is
witnessing a rejuvenation as traditional markets make way for new formats such as departmental
stores, hypermarkets, supermarkets and specialty stores.

The retailing configuration in India is fast developing as shopping malls are increasingly
becoming familiar in large cities. When it comes to development of retail space specially the
malls, the Tier II cities are no longer behind in the race. If development plans till 2007 is studied
it shows the projection of 220 shopping malls, with 139 malls in metros and the remaining 81 in
the Tier II cities.  The government of states like Delhi and National Capital Region (NCR) are
very upbeat about permitting the use of land for commercial development thus increasing the
availability of land for retail space; thus making NCR render to 50% of the malls in India.

India is being seen as a potential goldmine for

retail investors from over the world and latest
research has rated India as the top destination
for retailers for an attractive emerging retail
market. India’s vast middle class and its almost
untapped retail industry are key attractions for
global retail giants wanting to enter newer
markets. Even though India has well over 5
million retail outlets, the country sorely lacks
anything that can resemble a retailing industry
in the modern sense of the term. This presents
international retailing specialists with a great opportunity. The organized retail sector is expected
to grow stronger than GDP growth in the next five years driven by changing lifestyles,
burgeoning income and favorable demographic outline.

Another cap to the retailing industry in India is allowing 51% FDI in single brand outlet. The
government is now set to initiate a second wave of reforms in the segment by liberalizing
investment norms further. This will not only favor the retail sector develop in terms of design
concept, construction quality and providing modern amenities but will also help in creating a
consumer-friendly environment. Retail industry in India is at the crossroads but the future of the
consumer markets is promising as the market is growing, government policies are becoming
more favorable and emerging technologies are facilitating operations in India. And this upsurge
in the retail industry has made India a promising destination for retail investors and at the same
time has impelled investments in the real estate sector. As foreign investors cautiously test the
Indian Markets for investments in the retail sector, local companies and joint ventures are
expected to be more advantageously positioned than the purely foreign ones in the evolving
India's organized retailing industry.

Retail refers to the agricultural producers form through the sale of products will be sold directly to
residents living consumption or use as a social group, sold for public consumption with sales of
commodities. From the perspective of production factors, the retail trade is the typical labour-intensive
and capital-intensive industries. And, with the development of retail industry, and to raise the level of
production factors of typical labor intensive gradually to the capital intensive transfer.

The process of retailing involves selling goods or merchandise to the consumers. Generally there are
fixed locations in retailing like departmental stores, kiosks and small shops.  The operation and function
of retailing is to carry out the delivery services on the behalf of a manufacturing company. Retailers act
as the distributors of the company and they can sell goods to individuals or businesses. The operation of
retailers start when they buy the goods, from the manufacturers or importers. Retailing can be direct
when the goods will be directly taken from the manufacturing company and it will be indirect when
goods will be purchased from a wholesaler.

In the supply chain of a company, Retailing comes at the end of the chain. The function of retailing also
involves making goods accessible to the consumers. Retailing increases the convenience of the
customers to get the products. Nowadays, companies are coming up with different distribution
strategies to increase competencies. Retailing can also give a way to the company to promote its
products in an indirect manner. For example, better and visible shelf-positioning of products in their
retail outlets leads to increase in sales volume of the products.

This shows that Retailing can play an important role in enhancing the profits of the company and in
increasing the customers base.

Functions of Retailing
 Share
Retailers play a significant role as a conduit between manufacturers, wholesalers, suppliers and
consumers. In this context, they perform various functions like sorting, breaking bulk, holding
stock, as a channel of communication, storage, advertising and certain additional services.

Sorting

Manufacturers usually make one or a variety of products and would like to sell their entire
inventory to a few buyers to redu7ce costs. Final consumers, in contrast, prefer a large variety of
goods and services to choose from and usually buy them in small quantities. Retailers are able to
balance the demands of both sides, by collection an assortment of goods from different sources,
buying them in sufficiently large quantities and selling them to consumers in small units.

The above process is referred to as the sorting process. Through this process, retailers undertake
activities and perform functions that add to the value of the products and services sold to the
consumer. Supermarkets in the US offer, on and average, 15,000 different items from 500
companies. Customers are able to choose from a wide range of designs, sizes and brands from
just one location. If each manufacturer had a separate store for its own products, customers
would have to visit several stores to complete their shopping. While all retailers offer an
assortment, they specialize in types of assortment offered and the market to which the offering is
made. Westside provides clothing and accessories, while a chain like Nilgiris specializes in food
and bakery items. Shoppers’ Stop targets the elite urban class, while Pantaloons is targeted at the
middle class.

Breaking Bulk

Breaking bulk is another function performed by retailing. The word retailing is derived from the
French word retailer, meaning ‘to cut a piece off’. To reduce transportation costs, manufacturers
and wholesalers typically ship large cartons of the product, which are then tailored by the
retailers into smaller quantities to meet individual consumption needs.

Holding Stock

Retailers also offer the service of holding stock for the manufacturers. Retailers maintain an
inventory that allows for instant availability of the product to the consumers. It helps to keep
prices stable and enables the manufacturer to regulate production. Consumers can keep a small
stock of products at home as they know that this can be replenished by the retailer and can save
on inventory carrying costs.

Additional Services

Retailers ease the change in ownership of merchandise by providing services that make it
convenient to buy and use products. Providing product guarantees, after-sales service and dealing
with consumer complaints are some of the services that add value to the actual product at the
retailers’ end. Retailers also offer credit and hire-purchase facilities to the customers to enable
them to buy a product now and pay for it later. Retailers fill orders, promptly process, deliver and
install products. Salespeople are also employed by retailers to answer queries and provide
additional information about the displayed products. The display itself allows the consumer to
see and test products before actual purchase. Retail essentially completes transactions with
customers.

Channel of Communication

Retailers also act as the channel of communication and information between the wholesalers or
suppliers and the consumers. From advertisements, salespeople and display, shoppers learn about
the characteristics and features of a product or services offered. Manufacturers, in their turn,
learn of sales forecasts, delivery delays, and customer complaints. The manufacturer can then
modify defective or unsatisfactory merchandise and services.

Transport and Advertising Functions

Small manufacturers can use retailers to provide assistance with transport, storage, advertising
and pre-payment of merchandise. This also works the other way round in case the number of
retailers is small. The number of functions performed by a particular retailer has a direct relation
to the percentage and volume of sales needed to cover both their costs and profits.

Top 10 retailers worldwide

Rank
Retailers
No. of stores
Sales 2000
owned
(US $ Mill.)
1 Wal-Mart (USA)
4178
100,000
2 Carrefour (France)
8130
61,047
3 The Kroger Co. (USA)
3445
49,000
4 Home Depot (USA)
1134
45,738
5 Royal Ahold (USA)
7150
45,729
6 Metro AG (Germany)
2169
44,189
7 Kmart Corporation (USA) 2105
37,028
8 Sears Roebuck (USA)
2231
36,823
9 Albertson’s Inc. (USA)
2512
36,362
10 Target Corporation (USA) 1307
36,362