Beruflich Dokumente
Kultur Dokumente
retailing
the individual consumer with the manufacturing & distribution chain A retailer is selling goods at a margin of profit.
As a signatory of WTO
need to open up retail sector for foreign investment ( General agreement on trade)
94% -unorganized 6% organized- budding stage Largest source of employment after agriculture
Overview of policy
Guidelines to FDI
FDI up to 100% for cash and carry wholesale trading and export trading allowed under the automatic route FDI up to 51 % with prior Government approval (i.e. Foreign Investment Promotion Board FIPB) for retail trade of Single Brand products FDI is not permitted in Multi Brand Retailing in India.
Franchise Agreements
.
Cash And Carry Wholesale Trading Strategic Licensing Agreements Manufacturing and Wholly Owned Subsidiaries.
internationally
.Nov 2011
discount stores
At least half of the investment for backend infra Minimum investment $100 million Store can be setup only in population more than 1 million
State Government can prohibit if they wish States are empowered to put condition to integrate small shops in value chain At least 30% of manufactured items procured should be from SMEs At least 1/3 of sales made to small retailers either directly separate wholesale units
Raheja-Pantaloon
challenges
Foreign investor concern
Franchising- no change 51% route- must look for a partner Finding reliable partner Knowledge sharing partner
challenges
Foreign investor concern
tie up with an existing retailer? look to others not necessarily in the business but looking to diversify? Once chosen , they can not take another partner in the same field without the permission of first
challenges
Foreign investor concern
Arrangement of short to
Go it alone?
JV negotiation is vital and
careful
challenges
Government concern in partial allotment
results in large scale exit of Indian retailers exit of small outlets large scale displacement of employees in retail manufacturing did not have size and growth rate to take all
challenges
Government concern in partial allotment
Indian organized sector still in developing and budding stage Need to consolidate first before exposed with big players
challenges
limitation
Infrastructure
lack of investment in the logistics of the retail chain (inefficient market
mechanism) India -second largest producer of fruits and vegetables (about 180 million MT) cold storages total capacity - 23.6 million MT ( 80% potatoes) 100% fdi in cold storage but not attractive retail store
challenges
limitation
Intermediaries dominate the value chain flout mandi norms often lacks price transparency
Indian farmers realize only 1/3rd of the total price paid by the final consumer 2/3rd by farmers in nations with a higher share of organized retail.
challenges
limitation
challenges
limitation
No Global Reach
inability of this sector to access latest technology and improve its marketing interface.
challenges
opposing
achieve the sorts of economies of scale, supply chains and cold storage solutions)
FDI will be an indispensable
component for expanding their share of the market and therefore their profitability.
challenges
opposing
Wal-Mart turnover - $256 billion Avg growth rate - 12 -13 % annually Avg size of stores - 85000sq ft
India
avg turnover is $51 million. pantaloons, reliance cannot compare with the giant let alone the small retailers.
challenges
opposing
affected very badly large lot of unemployed retailers & other in the supply chain unemployed lot cant be absorbed in manufacturing or service sector push a large chunk of population below poverty line.
challenges
opposing
challenges
opposing
On an average a retailer earns Rs.186075 annually and only 4% of 12 million retail outlets have area more than 500 square ft. Now if FDI is allowed in such an unorganized sector than many changes can happen which can be positive or negative
challenges
opposing
Major challenges that lie ahead are: Economies of scale global players have economies of scale perfect in cost cutting providing the best at lowest price The way they perform their process itself builds an entry barrier
challenges
opposing
Brand name: world class products high quality highly valued brand name
The domestic brands dont have that charm and attracting power as of global brands.
challenges
The tools Equipments kind of warehouses Their processes are highly advanced better services and better quality products even in categories like perishable food etc.
cannot be compared with those used by Indian retail firms which in turn provides
challenges
opposing
Attractive salary and high incentives Can attract skilled employees a threat for big Indian retail firms.
challenges
opposing
Better infrastructure
can pose another threat to Indian retail firms which can hardly match the capabilities of giants on their own.
challenges
impacts
challenges
impacts
large scale investment flow to boost logistics to cater to demand of large retailers as also for leasing or buying land for setting up new stores Employment boost employment with lakhs of new jobs being created in the organised retail and logistics business.
challenges
impacts
Joint ventures Global players may not prefer to enter into joint ventures with Indian firms may also close down the existing ventures in wholesale and single brand which may adversely affect the Indian firms. This is possible when 100% FDI is allowed in multi-brand retail.