Global Retailing Scenario

&
Its Future
By: Varun modi
ROLL NO. 4472
INTRODUCTION TO RETAILING
•Retailing consists of the sale of goods or merchandise for
personal or household consumption either from a fixed
location such as a shopping mall or store, or from a fixed
location and related subordinated services.
•In commerce, a retailer buys goods or products in large
quantities from manufacturers or importers, either directly or
through a wholesaler, and then sells individual items or small
quantities to the general public or end-user customers, usually
in a shop, also called a store.
•Retailers are at the end of the supply chain. Marketers see
retailing as part of their overall distribution strategy.
Etymology
•Retail comes from the French word retaillier which
refers to "cutting off, clip and divide" in terms of
tailoring (1365).
• It first was recorded as a noun with the meaning of
a "sale in small quantities" in 1433 (French).
•Its literal meaning for retail was to "cut off, shred,
paring".
•In both Dutch and German also refer to sale of
small quantities or items.
 Shopping
•Shopping is the purchase of goods and services from retailers
.Shopping involves selection and purchase

•"Window shopping" is an American/English phrase meaning

to look into glass windows of a shop for entertainment and
imagine purchasing items without actually purchasing,
possibly just to pass the time between other activities, or
planning a purchase.
•“Screen shopping" is derived from this term but applies to
online retail stores (i.e., window shopping through a computer
screen).
•“Internet Shopping”(eBay, Amazon)
•Shopping is fun for some people.
 Classifying

Retail
Modern Format retailers (Organized retailing)
 Supermarkets (Subhiksha)
 Hypermarkets (Big Bazaar)
 Department Stores (Shoppers Stop)
 Cash & carry (wal-mart yet to
come)
 Company Owned Company Operated (Bata)

 Traditional Format Retailers (Unorganized

Retailing)
 Traditional Mom and Pop Stores: (KIRANA)

 Kiosks

 Street Markets

 Exclusive /Multiple Brand Outlets

Hypermarket
•Hypermarket is a superstore which combines
a supermarket and a department store.
•Gigantic retail facility carries an enormous
range of products under one roof.
•A consumer can ideally satisfy all of his or her routine
weekly shopping needs in one trip to the hypermarket.
•A typical Wal-Mart Supercenter covers 150,000 square feet,
•A typical Carrefour 210,000 square feet
•Hypermarkets choose suburban or out-of-town
locations that are easily accessible by automobile.
•The concept was pioneered by Carrefour upon opening
its first such store in 1962 at Sainte-Geneviève-des-Bois, France
•In France, the dominant chain is Carrefour
2nd largest chain of hypermarkets in the world after Wal-Mart
Supermarket
A supermarket is a departmentalized
self-service store offering a wide variety
of food and household merchandise.
It is larger in size and has a wider selection
than a traditional grocery store.
The traditional supermarket occupies a
large floor space on a single level and is
situated near a residential area in order to be
convenient to consumers
The first true supermarket in the United States
was opened by ex-Kroger employee
Michael J. Cullen, on August 4, 1937,
in a 6,000 square foot (560 m²) former garage in Jamaica, Queens,
Department Store
Department stores usually sell products :
•Apparel
•Furniture
•Electronics Appliances
•Paint
•Toiletries & Cosmetics
•Photographic equipment
•Jewellery
•Toys
•Sporting goods.
Convenience store
A convenience store is a small store
or shop, generally accessible or local.
Alongside ,busy roads, gas/petrol stations.
Railway stations,densely-populated urban neighborhoods.
For meeting immediately or temporarily
requirements.
Items offered are milk, bread, soft drinks, cigarettes, coffee,
slurpees, candy bars, sandwiches, pizza hot dogs, ice cream,
candy, gum, chips, popcorn, maps, magazines, newspapers,
small toys, feminine hygiene products, cat food, dog food, and
toilet paper. CD, DVD, video game
Cash and Carry
•Goods are sold from a wholesale warehouse operated either on a self-
service basis or on the basis of samples retailers
•Professional users, caterers, institutional buyers are customers
•Wholesalers buy from manufacturers and sell mostly to retailers
•Selling and promoting, buying and assortment building, warehousing,
transporting, financing, risk-bearing, supplying market information, and
providing management services
•Cash and carry wholesaler arrange the transport of the goods
themselves and pay the goods in cash and not on credit
•100% FDI is allowed in this format in INDIA.
•WAL-MART & BHARTI. Joint venture based on this strategy.
•METRO(GERMANY), CARREFOUR(FRANCE),TESCO(U.K)
planning to enter through the same format.
Other retailing Formats

Kiosk

Variety store
World`s largest Malls
•Berjaya Times Square in Kuala Lumpur, Malaysia, is 700,000
m². (approximately 7 million square feet).
•Beijing's Golden Resources Shopping Mall, opened in
October 2004, is the world's largest, at 600,000 m²
(approximately 6 million square feet).
•SM Mall of Asia in the Philippines, opened in May 2006, is
the world's third largest at 386,000 m² square meters of gross
floor area with further expansions still ongoing.
•The Mall of Arabia inside Dubailand in Dubai,
United Arab Emirates, which will open in 2008, will become
the largest mall in the world, at 929,000 square meters (10
million sq. feet).(22000 small shops of avg 50 sq.yds in india)
Global Retailing Facts
World’s largest private industry
Above US $ 8 trillion sales worldwide annually
Accounts for almost 10% of GDP in most
countries
Major employer in most economies
–16% in US
–15% in Brazil
–12% in Poland
– 7% in China
Generates competition which results in
–reduction of prices
–product and service innovation
–enhanced customer experience
Biggest retail Sales
countries of the world
•U.S U.S $ 4 tn (13 times of Indian market)
•E.U U.S $ 2 tn
•JAPAN U.S $ 1 tn
•CHINA U.S $ 750 bn
•U.K U.S $ 444 bn
•INDIA U.S $ 300 bn
•RUSSIA U.S $ 200 bn
Biggest retailers of the
World
U.S.A US $316 Bn
FRANCE US $95 Bn
U.S.A US $73 Bn

U.K US $62 Bn

U.S.A US$56 Bn
Reason For Success of
Global Retailers
•Better Consumer Demand
•Better Consumer Confidence
•Computer Operated Depots
•Better Logistical System
Evolution of Indian retail
Modern Formats/
Historic/Rural Traditional/Perva Government
International
Reach sive Reach Supported
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/ Shopping
Entertainmen Stores/Convenie Low Costs / Experience/Efficie
Evolution of Indian retail
 Informal retailing Sector
 Typically small retailers.

 Evasion of taxes

 Difficulty in enforcing tax

collection mechanisms
 No monitoring of labor laws

 Formal Retailing Sector

 Typically large retailers

 Greater enforcement of taxation

mechanisms
 High level of labor usage monitoring
Large Indian retailers
 Hypermarket
 Big Bazaar
 Giants
 Shoprite
 Star
 Department store
 Lifestyle
 Pantaloons
 Piramyds
 Shoppers Stop
 Trent
 Entertainment
 Fame Adlabs
 Fun Republic
 Inox
 PVR
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
 Falling interest rates

 Easier consumer credit

 Greater variety and quality at all

price points
The changing Indian
consumer
 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

 Post Liberalization children coming

of age
100 mn 17-21 year olds*. Tend to

spend freely.
 Greater levels of education
Anticipated growth
 Market size
 Current market size is roughly US$

300 bn
 Only 3% is through organized
retailing
 96% of the 12 Million stores are less

than 500 Sq. ft.

 Forecast Growth rate for the retailing

industry is roughly 8.3% for 2003-

2008
 Sales from large format stores would

rise by 24-49%
 Formal and modern format retailing

would enjoy rapid growth

India`s growing no. of domestic retail chains
FDI in Indian retailing
 Current Indian FDI Regime
FDI not permitted in retail

trade sector, except in:

Hi-Tech items / items
requiring specialized
after sales service
 Medical and diagnostic

items
 Items sourced from the

Indian small sector

(manufactured with
technology provided by
FDI in Indian retailing
•No FDI is allowed in multiple brand
retailing
•100% FDI allowed in cash & carry
format(e.g Walmart-Bharti)
•51% FDI allowed in single brand
retailing(Nike,Gucci,Versace,Mcdona
ld)
How FDI ?
 FDI should be allowed in stages

3 yrs.
 Initial stages: 26% FDI

 Establishment Phase: 49% FDI

 Mature Phase: 100% FDI 3 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
Hot Destinations
Tier 1 cities:
Delhi,Mumbai,Kolkata,Chennai
Tier 2 cities:
Hyderabad, Bangalore, Ahmedabad,
Gurgaon, Pune, Baroda,Noida
Tier 3 cities:
Chandigarh, Coimbatore, Trivandrum,
Faridabad, Ludhiana, Cochin, Shimla,
Mysore,Amritsar
Prevailing Forthcoming
Major Players Mammoths
      Future Group Reliance Retail
      Trent Ltd Bharti Retail
      RPG Enterprise
Birlas
      Vishal Retail Ltd
      Shoppers Stop Ltd Tatas
      Bata India Ltd Godrej Adhaar
      Provogue India Ltd
       ITC e-choupal
Case study :
Chinese

retailing
FDI permitted in 1992. 40
retailers have secured approval
foreign

 Retail sales have grown@19.5% yoy

since FDI was permitted

 FDI initially restricted to 6 major cities

(including Beijing, Shanghai and
Guangzhou) and SEZs

 Foreign ownership initially restricted to

49%

 US$ 22 bn of FDI attracted, 3.6% of

total FDI
 In 2003, FDI in wholesale and retail

was US$ 1.1 bn (Around 30% of our

total FDI in 2003)
 Current restrictions on FDI will be
 37
5
30
US$ bn

0
22
5 FDI in retail
150 allowed

75

7 8 8 9 9 9 9 9 9 9 9 9 9 0 0 0
8 0 5 0 1 2 3 4 5 6 7 8 9 0 1 2

Years

 Retail sales grew @ 19.5% yoy for the next 4 years

after the introduction of FDI in 1992
Current News
•Eleven retailers gearing up for IPOs
•40 retail players to spend $25 billion in next four years
•Aditya Birla Group signifies intent to become leading
player in retail industry
•Big Bazaar to open 60 new stores
•Shoppers’ Stop gears up for luxury retail
•Reliance targets Rs. 100000 crs. Retail sales target
•Dabur explores entering consumer retail business
•The retail industry in India is estimated at $427
billion in 2010 and US$ 637 billion in 2015
Recommendations
 Grant industry status to retail
 Permit FDI in Retail in phases
 Invest in supply chain infrastructure
 Ease distribution – infrastructure
creation, octroi
 Ensure single window clearance for
retail chains
 Organize market for real estate
 Ensure proper rent laws

 Enforce zoning laws and city

development plan
 Increase land supply

 Ensure flexibility of labor laws

You Will
always Shop
In This Way
in Future !
THANKS
THANKS !