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LACONICS

SHIVANGI GUPTA

VARUN DUBEY

SHRUTI GARG

ISSUES FOR DISCUSSION

RETAIL INDUSTRY: AN OVERVIEW
FDI IN RETAIL POLICY PERSPECTIVE
GLOBAL GIANTS IN INDIA
MYTHS AND REALITIES
RECOMMENDATIONS






RETAIL INDUSTRY : AN
OVERVIEW

and their spending power

Indian retail sector today is valued at $450
billion, and is increasing day by day due to its
increasing middle class population and their
spending power .
Indian retail sector has two parts:
Organized
Unorganized
Organized sector which forms around 20 -30 %
in other countries . In India it forms only about
6% while rest is all unorganized consisting
of small retailers






0 20 40 60 80 100 120
US
Taiwan
Malaysia
Thailand
Indonesia
China
India
organised
unorganised
Organised vs Unorganised Retail at
Global Level
Introduction to Modern Retail
Weekly
market
Village
melas
Kirana
stores
Convenien
ce store
Governme
nt stores

Super
markets
Hyper
markets
Brands
outlets
malls
Indian Retail Sector




GRDI Position : 3
rd

Size : $ 400 billion
Growth Rate : 13%
GDP contribution : 12%
Major sector : Food and Grocery
Employment : 2
nd
largest industry
(35.06 million)
Types: Organized ( 5%)
Unorganized ( 95%)






Format Description Retailers
Hypermarkets Offering basket of product Spencers, Big bazaar
Cash and Carry Bulk-buying requirement Bharti-wal-mart
Departmental stores Large layout, Wide merchandise mix Lifestyle , Globus
Supermarkets Household product as well as food as
integral part of the service
Apna bazaar , food
bazaar
Shop-in-shop Shops located in shopping malls Navras ( big bazaar)
Specialty stores Focus on individual product type Brand Factory
Category killers Particular segment The LOFT
Discount stores Branded product at discounted
prices
Subhiksha, levis
outlet
Convenience stores Small Retail stores In and out
Major Indian Retailers :
Categories
FDI IN RETAIL
POLICY PERSPECTIVE

FDI Policy Initiatives


1991- FDI allowed selectively up to 51% in priority
sectors.
1997-FDI allowed up to 100% in sectors like
mining, manufacturing.



2000-06 FDI allowed up to 100% in specified sectors.
FDI limits increased.
Procedures further simplified

The top 3 Indian Regions attracting the highest FDI.
Mumbai, Delhi and Karnataka.
Account for nearly 62% of the total FDI.
Why Global Retailers
Look Up to India?
Incentives attract FDI.
Market size and potential are sufficient inducers.
Tax breaks, import duty exemptions, land and power
subsidies, and other enticements.





Global Giants in India




Wal-Mart
Wal-Mart has emerged as one of the largest corporations
in the world, and definitely the largest in retail.
In May 2009, Wal-Mart was ready to open its first store
in India. The reason for Wal-Marts entry in India was
clear The Indian middle class.
Wal-Mart has a turnover of $ 256 bn. And is growing
annually at an average of 12-13%. In 2004 its net profit
was $ 9,000 mn. It had 4806 stores employing 1.4 mn
persons. Of these 1355 were outside the USA. The
average size of a Wal-mart is 85,000 sq.ft and the
average turnover of a store was about $ 51 mn.




Myths
Prices of different items are less here.
Corporate retail is throwing away middlemen.
They are creating employment. The employment potential projected
is 2 million jobs.
Farmers are getting better deal. Corporations are friends of farmers
and consumers.
Corporate retail sell fresh.
Corporate retail is promoting local economy.
Myths and Realities about the Global
Giants arrival to India




Corporate entry will make the supply chain more efficient. They are
more scientific than the existing system.
There is huge consumer demand for corporate retail.
There is room for all, as Indian economy is growing at an enormous
pace.
Corporation led shops sell cheap and consumers save money
shopping there.





Realities
The rates at which the vendors sell are less as those in the
corporate retail shops.
They are becoming the new mega middlemen and creating
monopolies by becoming the wholesaler, distributor and the
retailer.
They are robbing livelihoods many more times then the number
of jobs they are going to create. For creating 2 million jobs they
are going to destruct 40 million livelihoods in retail sector.
Corporations are buying from existing mandis and not straight
from farmers at this point of time, so there is no question of
farmers getting a better deal.





The hawker sells much fresher than any of these shops. Long distance
supply chain and refrigeration means stale fruits and vegetables.
They have destructed local economy wherever they have gone, and
are doing the same in India.
The supply chain gets more centralized, and the average distance
travelled by food increases manifolds.
The corporations are pushing the agenda, never have people in India
demanded for corporation led retail.
The corporate retail chains cannot prosper without killing the small
businesses.





Lifestyle plans to
have more than 50
stores across India by
2012-13.
Timex India will open
another 52 stores by
March 2011 taking
its total store count
to 120

Pantaloon Retail
India (PRIL) plans to
invest US$ 77.88
million to add up to
existing 2.4 million sq
ft retail space.

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

Future Investment




I
N
D
I
A
N

Pantaloons
Reliance
Bharti retail
RPG
Lifestyle
K raheja
Subhiksha
Piramyd
Trent
Vishal group
Tesco
Walmart
Metro
Carrefour
B&Q
Target
G
L
O
B
A
L




RECOMMENDATIONS

The Government and RBI need to evolve suitable lending
policies that will enable retailers in the organized and
unorganized sectors to expand and improve efficiencies.
National Commission must be established to study the
problems of the retail sector and to evolve policies that will
enable it to cope with FDI as and when it comes.
The proposed National Commission should evolve a clear
set of conditionalities on giant foreign retailers on the
procurement of farm produce, domestically manufactured
merchandise and imported goods.
Entry of foreign players must be gradual and with social
safeguards.
In order to address the dislocation issue, it becomes
imperative to develop and improve the manufacturing
sector in India.



..Our Conclusion
Let the liberalization be in steps
rather than being a leap.

F
D
I