Retail Scenario

An Overview
• World Retailing
–World’s largest private industry
–US $ 9 trillion sales annually
– 47 fortune companies and 25 top Asian companies are
retailers

• Indian retailing
–Largest employer after agriculture - 8% of population
–Estimated to be a USD 200 billion industry
–Highest outlet density in world
–Around 12 million outlets
–Dominated by un-organized sector, only 3% is the organized
share but expected to grow to 5-10% at the end of 2010
–Still evolving as an industry and long way to go
Organized Retailing in All over the world

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Category Wise distribution of Indian Retailing
Organised Retail Pie

Books & Music Footwear

Watches 3% 8%
4%
Mobile
Accessories
3% Entertainment
2%

Consumer
Durable
Clothing 9%
39%

Health & Beauty

3%

Furniture &
Furnishings
Food & Groceries 8%
Catering Services
11%
7%
Jewellery
3%
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 Evolution of Indian retail
Historic/Rural Traditional/ Government Modern Formats/
Reach Pervasive Reach Supported International

Exclusive Brand Outlets

Hyper/Super Markets
Department Stores
Shopping Malls
PDS Outlets
Khadi Stores
Cooperatives
Convenience Stores
Mom and
Pop/Kiranas
Weekly Markets
Village Fairs
Melas

Source of Neighborhood Availability/ Low Shopping

Entertainment Stores/Convenience Costs / Distribution Experience/Efficiency
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 The changing Indian consumer

Greater per capita income

Increase in disposable income of middle class
households
20.9%* growth in real disposable income in ’99-03.
Growing high and middle income population
Growing at a pace of over 10%* per annum over
last decade
Affordability growth
Easier consumer credit
Greater variety and quality at all price points
* Euromonitor Retail Survey 8
• The urban consumer
–Getting exposed to international lifestyles
–Inclined to acquiring asset
–More discerning and demanding than ever

• No longer need-based shopping

–Shopping is a family experience

• Changing Mindset
–Increasing tendency to spend
–Greater levels of education
–54 percent of Indians are under 25 years of age,
Tend to spend freely
Factors responsible for the development
of the retail sector in India:
• Rising incomes and improvements in
infrastructure are enlarging consumer markets
• Liberalization of the Indian economy which has led
to the opening up of the market for consumer
goods has helped the MNC brands like Kellogs,
Unilever, Nestle, etc. to make significant inroads
into the vast consumer market by offering a wide
range of choices to the Indian consumers.
• Shift in consumer demand to foreign brands
like McDonalds, Sony, Panasonic, etc
• The internet revolution is making the Indian
consumer more accessible to the growing
influences of domestic and foreign retail
chains. Reach of satellite T.V. channels is
helping in creating awareness about global
products for local markets.
 The Indian Advantage
• Second only to China in Asia
• Least saturated of all global markets studied
• The least competitive of all global markets studied
• Implies lower barriers of entry for global players
• Considering tremendous market size, excellent
potential for foreign players
• India ranked 3rd in the Global A T Kearney FDI
Confidence Index in 2005-06
• Provides access to global markets for Indian producers
• Higher Competition
 Benefits to the government

Greater Consumer
Greater Per
Spending due to
Capita Income
economic boom
GDP Grow th

Employ Benefits Greater

ment to Govt. Exports
Increasing Greater
Tax Paying Sourcing
Increased Tax
Population From India
Revenues

Reduced Tax
Evasion
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Challenges to Retail Development in India
• Retail not being recognized as an industry in
India. Lack of recognition as an industry
hampers the availability of finance to the
existing and new players. This affects growth
and expansion plans.
• The high costs of real estate: Real estate prices
in some cities are among the highest in the
world. The lease or rent of the property is one
of the major areas of expenditure; high lease
rentals eat into the profitability of a project.
• Lack of adequate infrastructure: Poor roads
• Multiple and complex taxation system