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“The phoenix is the bird which visits Egypt every
500 years, but the rest of the time it flies about in
India. It is unique in that it gives out ray of sunlight
and shines with gold” – from Philostratus II
The inescapable
crush of
thousands of
people in search
of a bargain
adds urgency &
excitement to a
heady mix of
heat, humidity,
During Diwali, zillions of shoppers
surge into cramped and chaotic
lane, eager to get the best price
from one of the many shops &
stalls, plus scores of itinerant
hawkers offering food, sweets,
clothing, shoes, books,
homewares, jewelry, toys, knick-
Welcome to India’s 21 st

century store wars!!

12 million – mom n pop stores

(kirana stores)

500 million shoppers

rising incomes => more
consumers switching from
local markets/stores to
As per Economic Survey of India
and Technopak analysis, Mar’2008
Organised retail : 2008  USD 400
2013  USD 615 bn
2018  USD 860 bn
Organised retail is 5% share of total
retail in India 
It’s 20% for China and 85% for
India is growing fastest @ 30-35% a
year 
India has highest retail density in
the world
Low labour productivity 
lack of capital 
Technology 
management talent 
distribution infrastructure 
Modern retail Vs. traders +

SARVANA STORE – a case study

Champion of discount shopping

Its slogan “lowest prices in the nation”
Standalone – roughly finished – well
worn stairs chipped & cracked
Storage cartons/product
leftovers piled everywhere
SARVANA STORE – a case study

Seven floors – holds everything a

lower-middle-class family aspires to own
Apparel, furniture, kitchenware, white
goods, electronic, luggage, toys.
…..and a top floor café!
25,000 sq.ft.  Rs.2 billion/year
courtesy 1L shoppers per day!
SARVANA STORE – a case study
Kishore Biyani studied Sarvana for weeks
His findings  ‘low margin + high
turnover’ is a powerful crowd puller AND
a commercial winner
Current retail situation

More than 500 malls are in

Many will die a fund-starved
death OR will morph into office
blocks 
Current affairs

Arvind Singhal–Technopak–retail
consultancy firm
“Don’t worry about consumer
demand. It’s there all right.
Worry about supply.”
“both real estate and human
talent are in scarce supply”
From A.T. Kearney’s stable

A.T.Kearney has ranked India as top

retail destination globally, ahead of
Russia and China!
BUT, it has also identified 10 key issues
that need immediate attention
1.under developed supply chain
2.inadequate utilities
3.inadequate human resources
From A.T. Kearney’s stable

10 key issues that need immediate

5.product supply base consumer understanding
7.insufficient government incentive
8.hurdles in taxation
9.real estate
10.regulatory policies
From A.T. Kearney’s stable

10 key issues that need immediate


e.g. Hypermarket in Mumbai – 29

unique licences – 6 months.
open another store – repeat
the same process!!!
From A.T. Kearney’s stable

 Substantial help required from the

 Staff training is of paramount
 Need for new generation retail
 Retailers to sponsor courses on
From A.T. Kearney’s stable

Dearth of warehousing &

distribution centres
Fresh food spoilage – 40% !!
because of interstate bureaucracy,
poor transport link, inadequate cold
From A.T. Kearney’s stable

*A.T. Kearney has suggested a

consortium by retailers, transporters
and cold storage
BUT…….. ‘cooperation is rare where
competitive juices run so freely!!’
*consolidations can help cut costs but
firms are wary about sharing
From A.T. Kearney’s stable

“ultimately a retailer draws

strength from its cost structure
and its supply chain. These two
variables can make or break you”

R. Subramanian – Subhiksha - chain of

1500 no-frills convenience stores –
benchmarks for efficiency & income psfpd
Ocean of Opportunity

India is likely to become world’s 5th

largest market by 2025 
290 million people moved up from BPL to
middle class which has swelled to 600
million 
Rising incomes  more discretionary
‘lifestyle’ purchases  increased benefit to
retail 
Ocean of Opportunity

TODAY, despite the impression of over-

building, there’s still paucity of right real
IT sector will boom, it’ll deliver electronic
infrastructure to retail
Cold chain, packaging, housekeeping,
security, advertising will grow
2 million new jobs will be generated by
Rural Role

Rural India  70% population =

800 million people in 620,000


Urban India  30% population =

350 million people in 5000 cities and

Rural Role

Rural people  irregular income 

rural credit cycle
Solution  enable them
Rural Role

GDP is USD 1000 – 70% stay in

countryside  half the population <
25 years => more consumers for
many years to come
Middle class is fast emerging,
spurring demand
Rural Role

India needs “a faster and more

inclusive” growth strategy to correct
imbalances within and between
different parts of the country and to
avoid social unrest.
Rural Role

Inclusive growth can come from

freeing the business, making
education & health available to
everyone, developing rural sector
Key challenges  labour reforms
India’s manufacturing & service
sectors only can create enough
Different Outlook

India’s youth 
little direct experience of socialism
experiment of India’s first 40 years
post independence
Buying a car or hand phone was an
alien concept
Different Outlook

Extensive survey by CLSA

Indian 20 year olds are incredibly
optimistic about the future
Balance hard work with leisure
Credit Lyonnais Securities Asia
Survey by CLSA

Brands constitute a major part of

consumption in India
For many young Indians, business
Entrepreneurs have replaced Bollywood
E.g. Vijay Mallya – kingfisher beer,
F1 racing team,
much-in-demand …..annual swimsuit
Survey by CLSA

1993 – MMS – FM : opened up the retail

sector to FDI
1996 – P.C. – F.M. : revoked FDI bowing
to pressure from Communist Party in
United Front govt
Objections raised
1.colonisation of Indian economy,
2.great damage to small shopkeepers &
Survey by CLSA
Objections raised
3.loss of jobs for people
like handcart vendors,
4.blow to SSI,
5.pressure on local
culture and tastes
Steering Group on FDI
Aug’2002 – Steering Group on FDI
reported to India’s Planning
Commission that:

‘the retail sector in India is dispersed, wide-

spread, labour intensive & disorganised,
therefore it is not desirable to lift the ban on
Early 2006……

Govt. relaxed the rules a little,

allowed 51% FDI in single brand retailing

100% FDI in wholesale cash-and-carry

FDI in multi-brand retailing remained off

So, what are the obstacles to a
socially-inclusive retail-led
Start with India’s dysfunctional supply
Lack of cold storage chain
Scarce management expertise
Market fragmentation
Rising real estate price

Fractious body politic that waxes and

wanes about FDI
Top it with hyper-competition as 6 major
retailers clash in India’s top 20-30 cities




“Indian Retail Opportunity is the biggest

and best in the world”

Let’s see how India’s “store wars” might

play on…..



Who else did you think!

More than half of the country is <

25 years

More than 1/3 of the country is <

15 years

“You believe that you can be at least as good

1974 
featuring Amitabh
 college boy who
slips into crime as
his family
roti, kapda aur makaan…..

30 years later………
roti, kapda and makaan still dominate
the spending habits of Indian consumer
Food is 40%, rent/utility – 12%, clothing
– 5% of household budget.

Thrift  conspicuous consumption

Basic necessity  lifestyle spending

You want….

iPod, cell phone, laptop, smart clothes,

holidays, new motorbike/car, hang out at
coffee shop, good education, fast-track
job, chance to become an Entrepreneur,
find true love, get married, start a family,
buy a house…………. WHY?
Why not?

½ of the population < 25 years

War with China & pokistan, creation of
B’desh, Indira Gandhi’s emergency
Tsunami, earthquakes in Gujarat,
Mumbai bomb blasts, terrorist bombing
in Mumbai, N.D. & Hyderabad, Naxals,
Maoists, perpetual tension with Pokistan
Liberalisation’s children

Economically, the youth has

experienced liberalisation since


Their life experience : ‘there may be some

bumps in life, but it’s OK to spend any money we

have’consumer confidence survey conducted by AC Nielson

consistently find that Indians are among the world’s most optimistic
SO, what do these consumers want?

Is it better presented food & global

brands in AC malls?
Or the age old fruit/veg. vendor who
calls by the house daily?
Or the kirana store owner who’ll deliver
a crate of beer long after mini-marts
have closed?
How important is price?

Today, families are becoming smaller

Today, there are more singles
Today, Kirana store is for emergency
Supermarket is for necessities
Hypermarket is for family outing
*Street hawker will still be around,
though less in no.
Food Habits

Food habits are changing

Yet the belief stays, “food should be
eaten hot, should be freshly
Packaged food is still viewed with
Value for money

Indian shoppers are the biggest hunters

of “value for money”
91% of Indian’s rank ‘good value for
money’ as their most important
consideration over other factors like:
store’s product range
location convenience
environmental factors
What is Value-for-money

Good-value-for-money store is that

whose price is cheaper than the
competitors, who runs regular
promotions and price discounts
Price drives sales in India

advertising is most
powerful sales tool in
industry followed by
90,000,000,000 transactions!!!

That’s a lot of shopping!

90,000,000,000 transactions!!!

Most transactions are w/o receipt

85 mn people live in India’s 10 largest
cities (7% of population)
Punjab in North tops the infrastructure,
agriculture and consumer charts.
Kerala, T.N., Karnatak, are gaining
ground – reasons  literacy, more
urbanisation, easier climate, more
Fortune at the bottom of the pyramid

‘Fortune at the bottom of the

pyramid’ – C.K.Prahlad – US based
Author, Academic and Management Guru

Died on 17th April,

Global study by I.F.C. and W.R.I.

2007 – Global study by I’nal Finance

Corporation and World Resources
Institute  900 million Indian household
with < USD 3000/year of purchasing
power => USD 1.2 TRILLION of
Q. Where will they be after a few years
Consumer’s choice…

 Consumer’s make interesting choices

as they move up the income ladder
 Access to electricity also leads to
making ‘lifestyle’ purchase
 25% of rural and 66% of urban
households have T.V.
 Villagers want fridges, cookers, cell
phone, scooter, etc.
Consumer’s choice…

 Middle & bottom of pyramid comprise

of aspirers, seekers, strivers
 According to NCAER, the above 3
segments will have 100 mn
households with USD 500bn to spend
by 2010

National Council for Applied Economic Research

Consumer’s choice…

Changes in consumer behaviour between

1990 & 2000:
increased spending on phones, clothing,
education, healthcare, gas & electricity
connection, transport & entertainment

2012 – India’s total retail spending =

USD 530 bn (USD 278bn at rural areas)
‘modern retail will thrive, but traditional
retail will survive’
2014 – Reliance Retail is expected to
cross USD 25 bn = 5% of total market
=> market is big enough to
accommodate many players

‘change drivers’ of consumption boom

 high literacy rate of young age groups
+ access to information
Basic necessities  lifestyle & health
oriented goods

India is the fastest growing telephony

market + largest consumer of gold
major spending will continue to come
from Maharashtra, T.N., Karnatak,
Gujarat, Punjab, Haryana, Delhi
These states will urbanise faster =>
large markets for processed food,
consumer durables, FMCG
Dr. Amit Mitra – Secretary General – FICCI

An Indian slum in reality is an

enterprise center – but the daily struggle
is unrelenting
Above these urban slums are 100 mn.
households which earn 72k/yr.
Sellers should know how to reach these
households – rural + urban
One such solution  micro packaging
Dr. Amit Mitra – Secretary General – FICCI

45 mn. ‘have more’ households –

C 18 mn. ‘have lots’ households –
Rs.1850/day (Rs.3085)*
4 mn. ‘have all’ households –
Rs.4930/day (Rs.14800)*

Retail is world’s largest private industry

with sales > USD 12 TRILLION (1/4 of
world gross product)
Biggest retail market – USA – USD 4
2nd rank – Japan – USD 1.2 trillion
China – USD 700 bn
India – USD 400 bn
McKinsey report
Apparel spend has remained constant at 5-6% of
household income …….and across income

India to become 5th largest consumer market by

McKinsey report
……… in line with global benchmarks

SOURCE : Euromonitor; MGI

Class Structure

75% of all consumer spending is by

poor class
By 2025 
2% globals – 20% of total spending
Middle class – 59% of total
Lower class - 21% of total
Class Structure

“marketers need to go out and look for

new customer as their profile is changing
very fast”
India has 784 towns with population >
Mumbai (18 mn) + Delhi (14 mn) +
Kolkata (14 mn) + Chennai + Hyderabad
+ Bangalore + Ahmedabad + Pune = 6%
Class Structure

Almost 2/3 of India’s middle class

opportunity will lie outside top tier urban
Chandigarh, Ludhiana & Amritsar have
average incomes ≥ top tier cities
Technopak – short term assessment – 2008

Trend 1. Socio-economic differences are

blurring. Different consumer groups
share the same aspirations
Trend 2. The chasm between India's
flourishing cities and bleak rural
hinterland is narrowing. A new prosperity
is sprouting in rural India.
Technopak – short term assessment – 2008

Trend 3. Society wants to look young

forever. Youthful behaviour persists into
adulthood; 40-year-old men and women
look, talk, act and dress like people in
their twenties
Trend 4. Focus has given way to multi-
faceted. Most people today are engaged
in multiple activities at the same time
Technopak – short term assessment – 2008

Trend 5. Sharing is in, be it wealth or

content, as typified by iTunes, YouTube
and blogs.
Trend 6. Increased demand for leisure
travel, real estate and unique lifestyle
experiences has fuelled the concept of
renting ownership.
Trend 7. Mobile phones represent a
Technopak – short term assessment – 2008

Trend 8. Media-aware kids with access to

global information are being consulted by
their parents on decisions over holidays,
cars, consumer durables, and so on.
Trend 9. Indian consumers are becoming
environmentally conscious, using
recycled products and opting for eco-
friendly items where possible.
Technopak – short term assessment – 2008

Trend 10. There is an interest in the

heritage and history of modern concepts.
This search for roots is evident in music,
fashion, and design trends.