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Agenda
Retailing : An overview
Indian retail
The change factor
FDI in Indian retailing
Why FDI ?
How FDI ?
Retailing: An overview
An overview
Retailing
Worlds largest private industry
US$ 6.6 trillion sales annually
Indian retailing
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
Retailing: An overview
Wal-Mart
Topmost
global
Fortune
500
company(3 Consecutive Years)
Annual Sales of over US$ 250 bn
Indias
two largest retail player
turnover around US$ 158 mn (Bata)
and US$ 102 mn (Shoppers Stop)
Fortune 100
9 Retailers
Carrefour,
Ahold,
Home
Depot,
Kroger, Metro, Kmart-Sears, Target,
Albertsons
An overview
Traditional/Perva
sive Reach
Government
Supported
PDS Outlets
Khadi Stores
Cooperatives
Modern Formats/
International
Exclusive Brand
Outlets
Hyper/Super
Markets
Department Stores
Shopping Malls
Convenience
Stores
Mom and
Pop/Kiranas
Weekly
Markets
Village Fairs
Melas
Source of
Entertainmen
t
Neighborhood
Stores/Convenie
nce
Availability/
Low Costs /
Distribution
Shopping
Experience/Efficie
ncy
Indian retail
Difficulty
in
enforcing
collection mechanisms
No monitoring of labor laws
tax
Indian retail
Corporate Houses
Tatas: Tata Trent
RPG group: Food World, Health
and
Glow, etc
ITC: Wills Life Style
Rahejas(ShoppersStop),
Hiranandani(Haiko),
DLF(DT
cinemas) etc.
Dedicated brand outlets
Nike, Reebok, Zodiac etc
Multi-brand outlets
Vijay Sales, Viveks etc
Manufacturers/ Exporters
Pantaloons, Bata, Weekender
Indian retail
Hypermarket
Department store
Indian
retailers
Big Bazaar
Giants
Shoprite
Star
Lifestyle
Pantaloons
Pyramids
Shoppers Stop
Trent
Entertainment
Fame Adlabs
Fun Republic
Inox
PVR
Indian
consumer
Indian
consumer
Challenges
in the Industry
Low domestic competition
Wholesale
system
under-invested
leading to 20-40% wastage
Industry
Challenges
Challenges
issues
Poor Infrastructure
Opportunities
Anticipated
growth
Market size
Current market size is roughly US$
286 bn*
96% of the 12 Million stores are less
than 500 Sq. ft.
Forecast Growth rate for the retailing
industry is roughly 8.3% for 20032008
Sales from large format stores would
rise by 24-49%**
Formal and modern format retailing
would enjoy rapid growth
Growth factors
Growth
factors
Advantage
India
Russia
China
A.T
Organised
Organised
Rs. Billion
Retail
Retail as %
Rs. Billion
of Total
Products
6422
50
980
185
19
554
30
Consumer durables
415
43
10
Pharmaceuticals
364
10
Home Solutions
351
32
115
15
13
Others
1159
111
10
10360
476
Total
FDI in Retail
not
permitted
Current FDI
How they
are present
Distribution
International company sets up local
distribution office
Supply products to Indian retailers
to sell
Also set up franchised outlets for
brand
Swarovski, Hugo Boss
Wholesale trading
Cash and Carry operations
100% FDI permitted
Metro Cash n Carry
How they
are present
Why FDI?
Benefits of
FDI
Improve competition
Develop the market
Greater level of exports due to
increased sourcing by major players
Sourcing
by Wal-Mart from China
improved
multifold
after
FDI
permitted in China
Similar
increase
in
sourcing
observed for Metro in India
Provides access to global markets
for Indian producers
Why FDI?
Investment in technology
Cold storage chains solve the perennial
problem of wastage
Greater
investment
in
the
food
processing sector technology
Better operations in production cycle and
distribution
Benefits of
FDI
Better lifestyle
Greater
level
of
wages
paid
by
international players usually
More product variety
Newer product categories
Economies
of scale to help lower
consumer price
Increased
purchasing
capacity
of
consumers
How FDI ?
How FDI ?
2 yrs
2 yrs
FDI policy
No incentives needed to attract FDI
Market
size and potential are
sufficient inducers
No need for costly tax breaks, import
duty exemptions, land and power
subsidies, and other enticements
Thank you