INDIAN RETAIL SECTOR

Presented By: Suraj Patil, Shakti Dash, Vidwaita Sachan

INTRODUCTION
Definition
Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser . The retail transaction is at the end of the supply chain. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses.

In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user.

SOME KEY FACTS ON INDIA'S RETAIL SECTOR

Indian Retail Sector today is worth of US$ 590 Billion Indian retail sector accounts for 22% of the country's GDP and contributes to 8% of total employment Retail sector is the fastest growing sector in Indian Economy. Indian Retail sector is the fifth largest global retail destination. Indian retail sector is largely closed to outsiders to safeguard the livelihood of nearly 15 million small store owners. The organized retail market is growing at 35 percent annually while growth of unorganized retail sector is pegged at 6 percent. Demographic dividend with over 50% of country populace under 25 years of age is a prime driving factor for modern retail sector

DISTRIBUTION OF RETAIL MARKET

Retail Sector

Organized Sector(4%)

Unorganized Sector(96%)

Manufacture rs

Whole seller

Organized Sector
Distributor

Retailer

SKILLED WORKERS
INFLATION COMPETITION

TAXATION POLICIES

REAL ESTATE PROBLEM

PROBLEM IN RAISING FUNDS SUPPLY CHAIN MANAGEMENT

MARKET POWER

 Taxation laws in India favors only small retail businesses. Implementation of non-uniform VAT across states. Octroi and entry tax in some states.

No Automatic Approval for FDI- Only 51% FDI is allowed

to one brand shops in Indian retail sector.

Complications in issuance of licenses like a hypermarket in Mumbai must apply for 29 unique licenses & then when it has to come up with second store it has to apply for same 29 licenses all over again.

SWOT ANALYSIS

STRENGTH
Increasing demand driven by the countrys young working

population
Increase in per capita income which in turn increases the

household consumption
Create win-win situation for all links in value chain (

suppliers, producers, retailers and customers).

Improvement in the standard of living. Technology intensive industry

WEAKNESS
Lack of expertise in Supply Chain Management Inadequate Infrastructure Stringent Labor Laws

Lack of specialized professionals in Industry

Lack of industry status. Government Restrictions on FDI Non-Availability of Government Land.

OPPORTUNITIES

Change in consumer behavior pattern and increase in disposable income.

It is estimated that 15 million people would be engaged in Retail and Retail support activities by 2011 Indian rural markets offer a sea of an opportunity for the retail sector. Upcoming international Players Healthy prospect for the fashion industry.

THREATS

Indian taxation system favors small retail business.

Competition from unorganized Sector to the organized Sector. Middle class Psychology. Increasing Real Estate prices

ARGUMENTS FOR AND AGAINST REFORMS IN RETAIL

Against

Displacement of Unorganised Retailers Unfair Competition The small retailers do not have the competency to sustain against big retailers

Arguments for reforms in Retail

Creation of jobs in the educated middle class Investment into warehouse and cold storage chain will result in significant efficiency on supply chain. Farmers benefited through direct marketing and contract farming programme. Elimination of layers of middlemen More investments in retail supply chain and storage

REFORMS IN RETAIL SECTOR

Indias current policy does not allow FDI in retail trade except for Single Brand Retail

FDI up to 51% is allowed in Single Brand Retail with prior government approval 100% FDI is allowed in wholesale cash-and-carry format which operate in direct business to business segment

Recent Measures have been proposed by Committee of Secretaries to open up Multi Brand Retail Conditions stipulated for Multi Brand Retail include a minimum investment of US$100 million Would only be allowed to operate in cities with at least 1 million people

LESSONS FROM OTHER COUNTRIES

CHINA FDI was first allowed in 1994 to the extent of 26% Increased to 49% in 2002 and was fully opened up in 2004 by allowing 100% FDI MALAYSIA

One hypermarket is permitted for a population of 350000 and no new hypermarket is allowed within 35 km of city centres

THAILAND

Large retail stores have to located 15 km from commercial centres of provincial towns

IMPACT OF REFORMS AND FUTURE PROSPECTS

Pantaloons Reliance Bharti retail RPG Lifestyle K raheja Piramyd Trent

GLOBAL

INDIAN

Tesco Walmart Metro B&Q Target

Lifestyle plans to have more than 50 stores across India by 2012 13.

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

Pantaloon Retail India (PRIL) plans to invest US$ 77.88 million to add up to existing 2.4 million sq ft retail space by 2012

Timex India will open another 52 stores by December2011 taking its total store count to 120

Expected Growth
1.4 1.2 1 0.83 0.59 0.6 0.4 0.2 0.35
CAGR 10%

1.3

0.8

0
2008 2011 2013 2018

In the last four year, the consumer spending in India climbed up to 75%. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%. The total number of shopping malls is expected to expand at a CAGR of over 18.9 per cent by 2015.
Source:AT Kearney Report, Indian Retail

The initial cap on investment could be pegged at 49%. FDI should be leveraged to create back-end infrastructure. Restrict the number of stores that can be operated in a city. Allow access to the small retailers to the stores through special windows.