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					RETAIL SECTORS
Retail Sector
Evolution of Retail

 Barter System was known as the first form of retail.
 As time passed currency was exchanged with goods and services.
 Hawkers carried out the first Retailing in Push Carts
 Followed by Kirana Stores …….. Mom and Popup Stores
 Finally Manufacturing era necessitated the small stores and
   Specialty stores
 It was a seller market still than this point of time with the limited
  no of brands available
 Barter chain  Single brand franchise chain Standalone large
  store
  <_
  Chain of large stores And Finally Malls
           EVOLUTION OF RETAIL
• Economist says that Boom Has Started of
Retail due to more spending Capacity of
Indians

• Emerging of retail started in brief in patterns
like changing face of the Indian retail sector

• Provide customers with 3 V‟s i.e. Value, Variety
and Volume.
                        What is Retail?

   “A retail is one who stocks the producers goods and is involved in
    the act of it to the individual consumer, at the Margin of Profit “.

   As such retailing is the last link that connects the individual
    consumer with the manufacturing and distribution chain.

   Selling Directly to consumer selling in smaller units / quantities
    the bulk.

   Very high numbers near to neighborhood

   Reorganized by the service levels

   Retail Sector today is worth of 394 Billion Us $
           Indian Consumption


 Big PictureGDP
 2005 -06 :-PictureGDP -$700 bn :-

PFC -$220 bn (30%) Investment -$480 bn (70%)
 2012 -13 :- PictureGDP -$1200 bn :-

 PFC -$600 bn (50%) Investment -$600 bn (50%)
                Heterogeneous country


   29 states,12 different languages, 72 festivals
   Internet era, not industrial
   Young country -60% below 30 years of age
   Multi-format, multi-level
   Within the city, not suburbanIndian Retail-Ground
    Realities
Consumption = Development



  CREATIVE/             BETTER
  INNOVATIVE            INVESTMENT/
  avenues for           BUSINESS
  CONSUMERS to          opportunities for
  want to spend their   our PARTNERS &
  money                 INVESTORS
Different products involved in Retailing

Food
Books & Magazines
Fashion & Clothing
Personal Care
Optical Consumer Electronics
Sport & Leisure
Home Ware
Footwear & Leather
Toys & Games
Jewellery & Watches
Furniture

Petrol
Manufacturers




 Whole seller



                Organized Sector


  Distributor




    Retailer
Types of Retail Sectors
   Unorganized Retailing
   Hawkers (Kirana)
   Weekly Markets
   Organized retailing
   Convenient / Departmental stores
   Factory outlets and discounts Market
   Supermarkets
   Wholesalers market
   Company and Franchises showroom
Disadvantages Of Retail Industry in
India
   Margins are low
   High property cost
   Poor Infrastructure
   Expertise in logistics
   Couple of firms in retail sector have turn over more
    than Rs 100 cr
Factors that attracted major industry
players to enter the retail sector
   Phenomenal success of certain players in retail
    sector
      Eg: Shopper‟s Stop
   Hype created by management consultants and
    media
   Phenomenal growth of service sector and down
    turn in manufacturing sector
   A good way to leverage existing property
   Eg: Primals started developing Crossroads after
    closing of Roche factory they have acquired on
    prime property in Mumbai
Cont….
   Globalization
   Success of organized retail sector in developed
    countries
   Changes in Consumer behavior and increase in their
    purchasing power.
   Ever green demand for basic things like food
   Negative working capital ; Companies buy on
    credit and sell for cash
Importance
    Largest and fastest growing sector in India.

    Modern retailing forms one point stop for all shopping.

    Consumer gets a large product variety of brands to choose
     from one roof.

    First it was a sellers market and now its changing to buyers
     market.

    By 2010 Indian retail sector would be generating 10 million
     employment opportunities.
Retail Sector in India
Some of the Key Players in
Organised Retail
Analysis of Growth by ASSOCHAM

   Organized retail growing at estimated 25%

   It is expected that retail in India could be worth US$ 175-200 billion by
    2016.

   2008-09 Total retails contribution to GDP is between 8% which would
    further jump up to nearly 12% in next few years. By 2010, retails
    contribution to national GDP in totality is likely to be 22%.

   2008 – Retail Growth rate – 25-28%, Unorganized and organized
    retail size – 300 billion US$

  Opening 10 to 15 outlets by 2015, it plans to employ about 5,000
   people selling groceries, consumer goods, fruits and vegetables. India's
   retail industry is worth $300bn (£148bn)
Eg: Bharti has invested 60 Billion with the largest retail Walmart (last year)
GROWTH OF INDIAN RETAIL SECTOR




Retail Sector contribution to GDP sector is 8%-10%.
 Elasticity of Demand for Luxury and
 Necessities
        3.5

         3

        2.5

         2
Price




        1.5

         1

        0.5

         0
              0   0.5   1     1.5    2   2.5   3   3.5


                            Demand
Government Policies
   The retail industry in India is growing at a significant pace. However, there are
    several problems faced by the industry. The major challenges for the organized
    sector include:

        Taxation laws that favor small retailers.

        Multi-point octroi collection.

        According to analysts, for this industry to thrive, Indian retailers need to
         emulate worldwide retail practices such as accuracy in financial reporting,
         increased levels of corporate governance and greater accountability
         among employees.

        Foreign Equity does not go beyond 51 percent.

        Additions to the product categories to be sold under „single brand‟ require
         fresh govt. approval.
International Retail: At a Glance



             3%    2%   9%
           8%                              38%



         13%

                        27%



           USA      EU        Japan    China
           India    Russia    Others
Share of Organized Retail
Key Players




USA = US$ 2,350 Bn           UK = US$ 406 Bn        China = US$ 313 Bn


   Highly evolved US market has WalMart taking only 8% market share
   UK market has Tesco with only 13.4% market share
   China market still does not have a clear leader
SWOT Analysis
Strength
 Increasing demand driven by the country’s young working
   population

 Increase in per capita income which in turn increases the
   household consumption

 Create win-win situation for all links in value chain (
   suppliers, producers, retailers and customers).

 Improvement in the standard of living.

 Technology intensive industry
Weakness

  Lack of expertise in Supply Chain Management

  Inadequate Infrastructure

  Stringent Labor Laws

  Lack of specialized professionals in Industry

  Lack of industry status.

  Government Restrictions on FDI

  Non-Availability of Government Land.
Opportunities
     Change in consumer behavior pattern and increase in
      disposable income.

     It is estimated that 15 million people would be
      engaged in Retail and Retail support activities by
      2010

     Indian rural markets offer a sea of an opportunity for
      the retail sector.

     Upcoming international Players

     Healthy prospect for the fashion industry.
Threats

    Indian taxation system favors small retail business.


    Competition from unorganized Sector to the organized Sector.


    Middle class Psychology.

    Increasing Real Estate prices
Factors which the new entrant into
retail sector failed to verify
   For FMCG giants the proposition of their sales
    through organized retail remains small
   Failed to learn from the failures in organized
    retailing like TVS group‟s Stop & Shop.
   Growth rate of small retailers.
   Trading Inefficiencies which forces the manufactures
    to increase the price
Cont….
   Small retailers can compensate this by personalized
    services like credit and free home delivery.
   Unsupportive nature of few manufactures like not
    printing the bar codes, despite this being so
    important for retail logistics.
  International retailers in India:
  Strategies
                  Franchise
                      International  company gives name and
                       technology to local partner. Gets royalty in
How they are           return
  present             In case master franchise is appointed for
                       region or country, he has right to appoint
                       local franchisees
                         Nike, Pizza Hut, Tommy Hilfiger, Marks
                         and Spencer, Mango
                  Manufacturing
                      Company sets up Indian arm for production

                          Bata India. It also has right to retail in
                         India
   International retailers in India:
   Strategies
                  Distribution
                      International    company sets up local
                       distribution office
                      Supply products to Indian retailers to sell
How they are
                      Also set up franchised outlets for brand
  present
                         Swarovski, Hugo Boss



                  Wholesale trading
                     Cash and Carry operations

                     100% FDI permitted

                         Metro Cash n Carry
  Why FDI?

                 Improve competition
                 Develop the market
                 Greater level of exports due to increased
Benefits of       sourcing by major players
   FDI
                     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
Benefits of             technology
   FDI                 Better operations in production cycle and
                        distribution
                 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 ?

               FDI should be allowed in stages
                                                      2 yrs
                   Initial stages: 26% FDI



                     Establishment Phase: 49% FDI    2 yrs
How FDI ?
                     Mature Phase: 100% FDI          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
Wal-Mart‟s Productivity Loop
     Consequences of Wal-Mart‟s
     Productivity Loop
                            Step 1: Reduce Costs
A.       Squeeze suppliers
      1.    Extracts producer revenues
      2.    Relocated manufacturing overseas
      3.    Increase foreign debts
B.       Erodes Wages and Benefits
      1.    Low wages in a low-wage sector
      2.    Working off the clock
      3.    Skimps on benefits, e.g., health care
     Consequences of Wal-Mart‟s
     Productivity Loop
                           Step 2: Reduce Retail Prices
A.       Improves consumer living standards
      1.     Increases consumer purchasing power
B.       Displaces existing retailers
      1.     Drives out small chains and independent producers
C.       Displaces existing suppliers
      1.     Excludes local businesses from internal Wal-Mart supply
             systems
D.       Triggers retail price wars
      1.     Pressures industry rivals to imitate its operative behavior
      2.     Extends to national and global markets
Consequences of Wal-Mart‟s
Productivity Loop
                         Step 3: Increase Sales
A.      Increases efficiency of supply systems
     1.     Higher sales volume means greater economies of scale
B.    Facilitates additional consumer debt
Kishore Biyani and Big Bazaar
   Starts with his family business in textile.
   1987 he launched frist ready-made trousers brand-
    Pantaloon.
   1992 Pantaloon Fashion went public.
   Started manufacturing garments under two more
    brands – John Miller and Bare.
   The business seems unviable due to high distribution
    cost and margins.
   1997 – opened his first store at Kolkata.
Cont…

   Store did a business worth Rs 100 million.
   2001 he introduced the hypermarket concept
    adapted to Indian conditions in the form of Big
    Bazaar(Mumbai).
   For further expansion Biyani went for a loan of Rs
    1.2 billion.
   Was able to pull out over1,00,000 people within
    1st week of its operation.
Cont
 ….
   Gave the Indian customers the feel of local market
    place – narrow lanes, crowded market place and
    customers bumping into each other and into
    commodities.
   He understood that Indian like the hustle-bustle of
    the market place, which gives them a feeling that
    the goods are sold at a lower price.
   Exploited the Economics of scale.
   Tie up with manufactures to bring down the selling
    price of products.
    Cont
     ….
   2002 Biyani started Food Bazaar within Big
    Bazaar.
   Focused on “Farm To Plate“ concept in Food Bazaar
    (Farm next to the store).
   Sold In House products.
   Used traditional supply chain management.
   His principle was “KIS” Keep It Simple; ie not
    making the operations complex.
    CONSUMPTION IDEAS INVESTMENT
               IDEAS
   WHO? FUTURE RETAIL Everyone that constitutes
    consuming India
   WHERE? FUTURE SPACES Creating property &
    public retail infrastructure everywhere in India
   WHAT? FUTURE BRANDS Identify, mentor, invest
    and grow INDIA centric brands Plan
   HOW? FUTURE CAPITAL Property, Brands,
    Insurance & most importantly easy access to money
    for consumers
               LINE OF BUSINESS


 HEALTH, BEAUTY & WELLNESS
FINANCIAL PRODUCTS
 FASHION

 HOME
 FOOD

COMMUNICATIONS
 GENERALMERCHANDISE

LEISURE &ENTERTAINMENTL
             Pantaloon Retail (I) Limited
Fashion
  Pantaloons 25,000(sq.ft.) Lifestyle(format)
 Central 1,25,000(sq.ft.) Lifestyle

 Big Bazaar 50,000(sq.ft.) Value

 Fashion Station 15,000(sq.ft.) Value



   FoodFood Bazaar 10,000(sq.ft.) Lifestyle & Value
   GMBig Bazaar 50,000(sq.ft.) Value
   Books & MusicDepot 1,000-6,000(sq.ft.) Lifestyle &
    Value
     Type Health, Beauty & Wellness

Star & Sitara(Beauty Products) 1,000-2,000(sq.ft.)
  Value
Star & Sitara(Beauty Salons) 2,500(sq.ft.) Value
Health Village 25,000(sq.ft.) Lifestyle & Value
Communication :-
Gen M500-1,000 (sq.ft.) Lifestyle
M Port 1,500-2,000(sq.ft.) Lifestyle
M Bazaar 250-500(sq.ft.) Value
 Electronic Goods & Consumer Appliances
E-Zone 12,500 (sq.ft.) Lifestyle
Electronics Bazaar 3,000-6,000 (sq.ft.) Value
Furniture, Furnishings & Accents Collection I10,000
  (sq.ft.) Lifestyle
Furniture Bazaar3,000-6,000 (sq.ft.) Value
Home Improvement Home Town1,25,000 (sq.ft.)
  Lifestyle & Value
 Restaurants, Leisure & Entertainment
Blue Foods (50:50) --Fine Dining Restaurants
 Galaxy Entertainment (15.73 % stake)

 Bowling Company 30,000Lifestyle

 F123-Arcade & Games 7,000-20,000 Lifestyle

 Sports Bar 2,500 Lifestyle

 Chamosa 100 Value

 Footwear Retailing –Foot Mart Retail (I)

 LimitedLiberty Shoes (51:49)Shoe Factory 6,000-
  15,000 Value
 Fashion & SportswearPlanet
 Retail (49:51)Lifestyle
 KidswearRetailing

 GJ Future Fashions Limited (50:50)
Gini& Jony1,500-5,000Lifestyle
 Health, Beauty & Wellness :-

ManipalHealth Systems ManipalCure & Care
  (50:50)Lifestyle & Value
Talwarkar‟s(50:50)
                 ONLINE RETAIL

   Leveraging Future Group‟s presence across 70% of
    customer‟s wallet.
   Objective is to create the experience of
    26thJanuary on the net.Futurebazaar.comto focus on
    deals, gifting and trust.
   Beta testing underway
                    Subsidiary

   •73% HSRIL (Home)
   •74% FCH (Capital)
   •100% F/Media (OOH)
   •100% F/Bazaar (E-Tailing)
   •100% F/Logistics (SCM)
   •100% PFP (Sourcing)
   •100% Pantaloon Food Solutions (F&B)
                 Joint Ventures

   •49% Planet Retail
   •51% Liberty
   •50% GiniJony
   •50% Blue Foods
   •50% Talwalkar
   •50% Manipal
   •50% CapitalLand(REIT & MM)
   •50% Alpha GroupConsolidated
Conclusion
   Huge Scope for Development

   Competitive Market

   Organized retail is fast growing at a rate of 30%
    YOY

   Greater opportunity for employment
Recession Strategy
   Offering more & more special discounts.

   The Great Indian Shopping Festival.

				
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