The Retail Niche in India
RAMMS INDIA
PERCEPTION
REALITY
Interesting facts on
Every 10th billionaire is a retailer. 25 of the top 50 Fortune 500 companies are in Retail. In India the Retailing Industry provides employment to over 18 m people, second largest after agriculture. 1 out of every 25 families in India are engaged in the business of retailing
retail
72% of Indian population staying in rural market.
In India Per Capita square feet area under retail is just 2 sq. ft. or 0.2 sq. m.
Source: CII Conference on Retailing
Retail in India comprises of four major channels
Note: PDS: Public Distribution System Source: Retail in India, ICICI Bank, Feb 2004
Penetration of organized retail in India will grow to catch up with other matured markets
Indian retail story remains intact with strong fundamentals:
Economic slowdown/ inflation not crippling the opportunity
Consumer incomes growing Consumer aspirations rising Growing urbanization
Still Very Low Penetration of Modern Retail
Growth in Modern retails capability to achieve and share efficiencies across the value chain
$220 BILLION and counting
Growing at 20% per annum
SOURCE: MCKINSEY REPORT
Indian Retail Scenario Today
Retail amongst the largest industries in India,
With over
10% of countrys GDP
& about
8% of employment
12th largest economy in the world 4th largest in purchasing-power
parity terms
Over
58% of Indian population below 26yrs.
That is over 564 million people, nearly twice the total population of the United States
Modern Indian Retail Lifecycle
CREATE AWARENESS INCREASE CLIENT EXPECTATION STRENGTHEN BACK END MANAGEMENT CONSOLIDATION
New retailers Driving growth
Consumer demands Organized forms
Retailers strengthening Backend
Retailers going global / M&A
1993
2004
2010
2012
FIRST GEAR
SECOND GEAR
2008
THIRD GEAR
FOURTH GEAR
SOURCE: KURT SALMON ASSOCIATES
Market & Composition
Total No. of Retail stores in India
12-15 Million
Hawkers
8-10 Million
Grocery Outlets
4-5 Million
Urban Grocery Outlets
1 Million
Over
96% of
SOURCE: CII RETAIL
Indian Retail is unorganized
Market & Composition
2004-5
LARGER MALLS (1M Sq.ft)
2000
Multiplex & Leisure Cinema
Discount Stores
MALLS
1990 1980
BEFORE
MALLS (Price, Quality, Service & Entertainment) DEPARTMENTAL STORES (Price, Quality, Service Sensitive) TRADITIONAL RETAIL (Price Sensitive)
1980
4%
rapidly evolving modern organized Retail
Characteristics of Unorganized Retail
Retail Products:
Mainly Food & Beverage Products, Staples, Cigarette, Personal Care
Retailer Characteristics:
Uneducated Has loyal Clientele
Location:
Residential Areas, Main Roads spread across the Indian geography
Retailing Characteristics:
Over the counter sale Space limitation Home delivery
Typical Size:
Over The Counter, Occupies a space ranging from 100 - 750 sq ft.
Customer Profile:
Lower to upper middle class
Forms of Unorganized Retail
OUTLET: Grocers Mom & Pop Stores Approx. SIZE: 200- 500 sq ft
Forms of Unorganized Retail
OUTLET: Kiosk store
Approx. SIZE: 40 sq ft
Forms of Unorganized Retail
OUTLET: Street vendors Approx. Size: 30 sq ft
Changing Scenario
BEFORE
AFTER
Shift from Unorganized to Organized self service outlets
Forms of Organized Retail
ANSALS PROJECTS
Forms of Organized Retail
ENTERTAINMENT CITY NEW DELHI
Forms of Organized Retail
GOLD SOUK TRIVANDRUM
The Changing face of the Indian Consumer
Large population of
young spenders
The shift from buying to the shopping experience Growing finance options
Brand conscious & lifestyle products
Indian Shopping Basket
16%
3%
9% 5% 4% 3%
GROSS RENT, FUEL & POWER MEDICAL & HEALTH CLOTHING & FOOTWEAR RECREATION, EDUCATION & CULTURAL FURNITURE APPLIANCES FOOD BEVERAGES & TOBACCO
50%
TRANSPORT & COMMUNICATION
Brands in India Today
Law & Regulations
Foreign Direct Investment allows 51%
stake
in single brands
FDI allows international retailers in
cash & carry (Metro 100%)
This law will be relaxed in the next 3 years Hopefully for gradual increase in ownership stake
International Retailers in India
International Players Eyeing India Shoprite South Africa (Hypermarkets) Already in Landmark, Dubai (Lifestyle stores) Already in Marks & Spencers (Lifestyle stores) Already in Metro Cash & Carry (Wholesale Hypermarket) Already in Mango (Apparel Retailer) Already in Carrefour (Multiformat Retailer) Evaluating Wal Mart (Hypermarkets) 7-Eleven (Supermarkets) Evaluating Tesco Evaluating Starbucks Evaluating
SOURCE: CYGNUS RESEARCH
Major Indian Players
RELIANCE
6.7 billion USD invested in setting up multiple retail Formats. Sales expectation of 20 billion USD by 2010
Presently Indias largest retail company.
PANTALOON
10 million sq ft of retail space expansion
& expected sales 2 billion $ by 2008
Opening 50 hypermarkets of 4
RPG
million sq ft million dollars
Currently operating in lifestyle, books retail
RAHEJAS
& hypermarkets Investing 100 in
55 hypermarkets by 2015
PYRAMID
Opening 150 lifestyle department stores by 2010 Expanding to 10
TATA
to 40 departmental stores by 2010.
Also in hypermarkets & consumer electronic multi brand stores
Current Scenario of Indian retail
Proliferation of modern retail formats
400 new malls 350 50 1500 Departmental Hypermarkets Supermarkets Stores by 2008
100 MILLION Sq ft in retail space by 20102 15,000 small & big outlets to undergo facelifts
Opportunities
Signage & Graphics
Visual Merchandizing Mall & Store / Management Mall Planning
Retail Education
Shopper Research
Retail Technology
Opportunities Signage & Graphics
INFINITI RETAIL
20,000 sft. 6,000 products. 8 categories.
INVESTMENT: Rs.
From 30 to 100 large multi-brand consumer electronics & durables stores
FABINDIA
275 Cr in retail expansion. From 42 to over 150 over next 4 years. Prime strategy: to enter tier-III towns. 21 Cr in retail expansion. stores by 2008.
INDUS CLOTHING
1st phase: 30 Disney Jeans Stores by 2007 - 3 each in
INVESTMENT: Rs.
Delhi & Mumbai. 2nd phase: 50
LUXURY NICHE
Tommy Hilfiger, Gucci, Jimmy Choo & Tumi.
SEEKING: 50-20M
Mike Murjani to set up luxury niche in India with
40 free standing stores planned over 5 years Million Sft. Set to target 1,500 Indian cities
West Bengal Government to invest
RELIANCE RETAIL
RETAIL CHAIN
Rs. 100 Cr in vegetable retail chain.
Opportunities Mall Management
200 existing malls 400 new malls
65 malls coming up in 1 street:
Gurgaon, a high street near Delhi
Specialized malls:
Car, Jewelry, Weddings
Emerging need for Mall Management Services.
Opportunities Mall Management Services to Mall Developers
MALL DESIGN DEVELOPMENT
MALL FIT OUT & TENANT MIX GUIDELINES
MALL PLANNING
MALL TRAFFIC MANAGEMENT SYSTEM PLANNING
MALL COMMUNICATION SYSTEM PLANNING
Opportunities Mall Management Services to Retailers
STORE DESIGN & PRESENTATION
IN-STORE WAYFINDING & COMMUNICATION
INTEGRATED MARKETING PROMOTIONS & VM CALENDAR
CUSTOMER EXPERIENCE MANAGEMENT SERVICES
Opportunities Store Design
Existing stores have commonplace designs Growing popularity of
Experience Shopping
Emerging trend of new
store design concepts
with international brands
Most new innovations in apparel
stores
Indian fashion labels setting up boutique
Store fixtures in high
stores
demand
Opportunities Store Design & Build
Store design conversion & adaptation to
International concepts
Store designs for Indian
Brands
Shop fitting design & development:
China emerging as source, India: needs to adapt
Opportunities Visual Merchandizing
VM design, execution & management for retail chains
VM Academia Set-up
Opportunities Marketing at retail (POP)
POP strategy Design & Development
POP Deployment & Maintenance Management
International Designers, Architects & Mall Planners in India
JHP LONDON WD PARTNERS OHIO HELLMUTH OBATA KASSBAUM (HOK) Inc. NEW YORK
CHUTE GERDEMEN OHIO
SPAR Inc. NEW YORK: IN-STORE MERCHANDIZING
BENTEL ASSOCIATES, SOUTH AFRICA
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Visual Merchandizing & Indian Stores
Scope for Retail Education
8 Million
Retail jobs in the next
More than
2 Million
Skilled job opportunities
Need for
6 years
by 2008
quality education
Retail Training
Increasing Modern Retail Outlets
100 Million sq ft
Increasing Demand of Skilled people
8 Million Jobs
Huge shortage of
Skilled people
Retail Training The Opportunity
Despite perception
Large Indian retailers have
of huge people availability
Skilled People
in retail is at
in-house training
departments this whole area can be
premium
outsourced
Retail Design The Opportunity
Few schools today have national presence in
Retail Design
National Institute of Design National Institute of Fashion Design
(affiliated to the Birmingham Institute of Art & Design)
Retail Education The Opportunity
Opening of professional Retail training academy
National Footprint For the academy
Training based on Global Practices
International Visiting Faculty
Retail Education Immediate Opportunities Real Estate Management Visual Merchandising Design School Store Design Institute Retail Operations Management
Retail Research The Opportunity
As retail grows the Indian shopper is becoming more and more savvy
There is an untapped need for
understanding the Indian shopper is key
shopper research agencies
Retail Technology The Opportunity
Large players
in the organized retail are using technology from companies like
Various in-store technologies like
JDA, IBM, Wincor Nixdorf & Bizerba
POS, Narrow casting, Digital Signage's
have a huge market
Retail Supply Chain
The market size for logistics spend in India is Logistics cost for
$50 billion per annum, which is about 13%
of the country's GDP Huge opportunity for
manufactured goods
in the country accounts
for almost 30% of the total cost
Companies like
supply chain solution providers,
as the international standard for logistics costs ranges between 5% &
Bax GLobal, Manugistics, DHL, have already
set up shop in India
10%
Issues Facing The Indian Retail Industry
Retail has no Industry status
Fragmented supply chain
Regional & Seasonal Differences
Non availability of quality retail space
Non availability of skilled people
Lack of Infrastructure
Entry Challenges
Need long term perspective & financial Staying power
Cultural adaptability in working Style: Cannot transplant western retail practices
To develop an ability to deal with govt. red tape
(Improving Rapidly)
India is a regionally diverse market
29 states, 18 official Languages 325 spoken languages
a marketers challenge
The challenges of Indian retail
The Positioning Challenge
The Location Challenge
The Format Challenge
The Manpower Challenge
The Viability Challenge
The Positioning Challenge
Positioning on range
Position on price
Position on convenience
Position on store experience
Positioning mix of store retail brands
Retail Brand Wal-Mart Zara Differentiating Supporting Price Range Range Price Competitive Convenience Experience Qualifying Experience Convenience
Starbucks
Dollar General Nordstrom McDonald's Disney Store
Experience
Price Convenience Convenience Experience
Range
Convenience Range Price Range
Convenience
Range Experience Experience Convenience
Price
Experience Price Range Price
The Positioning Challenge
Retail Brand Big Bazaar Reliance Fresh Food world More Wal -Mart Subiksha Differentiating Supporting Price Price Price Price Price Price competitive qualifying
The Positioning Challenge
The biggest challenge for these retailers is
on how to differentiate.
There can only be one or two winners on
best price position
The Location Challenge
Lack of availability
of stores locations convenient to shopper
The infrastructural problems to get to a store The rising cost of leasing Mad rush to open stores contributing to increased cost
The Format Challenge
Multiple formats being experimented
on which are the few formats that will be future
Convenience versus supermarkets versus hypermarkets Size versus experience versus viability Specialty stand alone stores to
formats in malls and hypermarkets
Emerging trends with
Retailers
Format Diversification
Rapid Scale Up
By 2013, Modern Retail would have reached at least top 600 Indian cities and towns
Source: Mindscape
The Manpower Challenge
Big disconnect between quality of personnel and customer experience desired
Floor Personnel, Managing staff, visual merchandisers big - gap in skill sets required
Where is retail going to find skilled personnel when there is a total lack of organized training and understanding of the consumer experience desired
The Viability Challenge
The biggest question? Is Modern Retail Viable if so over what period of time Will there be a fall out ? Who will survive?
Is the path leading to mergers and acquisitions?
Where are we heading?
