Retailing is defined as "the

activities involved in the sale

of goods and services to
consumers for their personal,
family, or household use."
 Retailing: An overview

 Retailing
 World’s largest private industry

US$ 6.6 trillion sales annually

 Indian retailing
An overview  Largest employer after agriculture -

8%* of population
 Highest outlet density in world

Around 12 mn outlets

 Still evolving as an industry

Long way to go
• Almost 96% of these retail outlets are less
than 500 sq ft in size.
• Per capita retail space in India is 2 sq
ftcompared to US figure of 16 sq ft.
Traditional Retail
Vs
Modern Retail
• Small Unorganized Organized Retail
• Family owned Retail Modern Format
• Limited Range/Choice Large Pvt Sector

Better Product Quality

Shopping Better Service
Delight Wider range of Choice
Better Experience
 The Indian Story
• 10th largest economy in the world based on GDP

• 7.5% GDP growth forecasted over 2005-2007

• Real estate sector growing at 30% per annum and one of the
largest employer – a key contributor to GDP

• Residential market is 80% of the total real estate market

• Gap between supply and demand in residential market is 41

billion sq.ft.

• Office space demand of 66 million sq.ft. for IT industry over

next 5 years
• Real Estate in India projected to be USD 50 billion in 2008

• Organized retail space demand of 40 million sq.ft. over next

3-4 years

• India is ranked the 5th largest retail destination across the

globe

• Consumerism – the order of the day, which is fueling the

growth in both the commercial as well as the retail sector

• Globalization of Indian Economy

 Indian Retail Scenario
• Total Private Consumption Expenditure in India – 375 Billion
USD

• Retail Sale – 205 Billion USD (55%)

• Organized Retail – 6.2 Billion USD (3%)

• Retailing – 35% of GDP

• Outlet Estimates – Over 12 Million

• Format – Only 4% larger than 500 sq.ft.

• Second Largest Employer after Agriculture

 Retailing in India
• Emergence of modern retail formats

• Increased pressure on opening up FDI in retail sector

• Rapid Evolution of New-age Young Indian Consumers

• Rapidly increasing middle class

• Rising Incomes levels

• Increased Awareness Level among Consumers

• Exposure to International Brands

• Retail Space is no more a constraint for growth

 Malls in India

• A decade ago - not a single mall

• Two years ago - less than half a dozen

• Today - 40-50 malls

• 2 years from now – 300-500 malls

 Indian Organised Retail Industry
Organised Retailing - Market Size
• The size of the organised
16000 1,200 Retail industry estimated at
14000
Billions

Billions
~ USD 7.8 bn in 2004 – 05
1,000
12000
10000 800
8000
6000
4000
600
400
(only 3.5% of total retail
2000
0
200
0
industry).
FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010

Total Retail Market Organised Retailing • Organised retailing is

projected to grow at the rate
Source : Crisinfac

The Organised Retailing Pie - 2004

Clothing, Textiles &
of 25–30% p.a. to ~USD 25
Books, Music & Gifts
Catering Services
7% 3%
Entertainment
Fashion Accessories
38% bn by 2010.
2%
Food & Grocery
11%
Jewellery
• Clothing, Textile & Fashion
Furniture &
3%
accessories segments have a
Furnishings
8%
Watches
4%
dominant share in the
Mobile handsets &
accessories
3%
Health & Beauty
Hair & Beauty Care
organised retail industry
Products (incl Footwear
Consumer Durables
9%
Pharma)
2%
Services
1%
9%
accounting for 39% of the
Source : IMAGES – KSA Technopak Study
market.
 Indian Franchising Industry
• Sales from franchised business have grown at an
average rate of 20–30% p.a. in the past in India as
compared to an economic growth rate of 6-8%.
• Size of the franchising market estimated at ~ USD
2.2 bn in FY 2004 and is rapidly growing.
• New franchise development is estimated at USD
110 mn annually.
• Estimates of the Franchising Association of India
reveal that there are nearly 800 Franchise
systems already operating in India.
 Key Players
Domestic Players Existing Foreign Foreign
Early entrants: Players
Pantaloon, RPG
Aspirants
group, Shoppers Stop, Global Retail
Westside, Lifestyle, majors through
etc franchising model:
Pizza Hut, Waiting in the
Other large business McDonalds,
groups like Reliance, pipeline (also
Subway, KFC, etc
Bharti, Piramal scaling up
establishing/expandin Cash & Carry
formats: Shoprite sourcing from
g presence in retail
and Metro India):
Large Franchisors: Recent tie-ups: JC Penny,
NIIT, Café Coffee Bharti-Wal Mart,
Day, Aptech, etc
Carrefour, Tesco
Tatas-Woolworths
 Policy Status & Expectations
• FDI in retail is currently restricted in India
• FDI of up to 51% has been allowed in retail of ‘single
branded’ products
• However, cash & carry format is allowed 100% FDI
(Metro, Shoprite)
• 100% FDI allowed for development of real estate subject
to certain conditions
• Foreign players are allowed to tap Indian market through
franchising and strategic licensing agreements
• Govt. has already taken steps for the implementation of a
universal VAT system
• There is a strong expectation that FDI restrictions will be
gradually eased in the short to medium term
 Key Enablers
• Demographics in India’s favour
• Increase in disposable incomes
• Increase in use of credit
• Better shopping experience
• Better product offerings
• Real estate space availability
• Wealth effect
 Some Challenges
• Infrastructure

• Supply Chain & Logistics

• Skilled Labour – a significant challenge

• Competitive activity – reduction in margins

Indian Retail Scenario
2010 -11
 50 mn sq ft of retail space dedicated and
under development
 10,000 modern format stores spread across
the country
 600 Shopping Malls – from 100 at present
 As bigger players entering the Indian Retail,
we should see a growth upto 15-20% in this
industry from 2% as of today
 The Way Ahead
• India is amongst the least saturated of all major global markets in terms of
penetration of modern retailing formats

• Many strong regional and national players emerging across formats and
product categories

• Most of these players are now gearing up to expand rapidly after having
gone through their respective learning curves

• Real Estate Developers are also moving fast through the learning curve to
provide qualitative environment for the consumers

• The Shopping Mall formats are fast evolving

• Partnering among Brands, retailers, franchisees, investors and malls

• Improved Infrastructure
 Conclusion

The demanding assertive Indian consumer is now sowing

the seeds for an exciting retail transformation that has
already started bringing in larger interest from
International Brands / formats.
With the advent of these players, the race is on to please
the Indian consumer and its time for the Indian
Consumer to sit back and enjoy the hospitality of being
treated like a King.