There are two sides to the story: modern retail as the benefactor and modern retail as a scourge. Has there really been a change, any significant benefits accrued? How do people in the supply chain feel? What are the changes taking place?

1. Prime Source Forum – Focus on India
Impact of Modern Retail and FDI
© Third Eyesight, 2012
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2. Modern Retail
Two sides to the story
– Modern retail as the benefactor
– Modern retail as a scourge
What are the changes taking place?
© Third Eyesight, 2012
Has there really been a change? Have there been any
significant benefits accrued? How do people in the
supply chain feel?

3. International Fashion Brands in India:
Growth in Numbers
Slow, steady increase for ~18 years
Wave builds 2005 onwards
1990
1993
1996
1999
2002
2005
2008
2011
Source: Industry Research by Third Eyesight
Note: This chart only includes apparel and accessory brands, and excludes other lifestyle product companies such as
fragrance, luggage, home, or other consumer products. The chart is only illustrative, and may exclude brands with a very
small market presence, or those that have been withdrawn.
© Third Eyesight, 2012
1987
© Third Eyesight,
4x growth in 7 years

4. International Fashion Brands in India:
Shift in Strategy
JV /
OWN
1990
1993
1996
1999
2002
2005
2008
2011
Source: Industry Research by Third Eyesight
Note: This chart only includes apparel and accessory brands, and excludes other lifestyle product companies such as
fragrance, luggage, home, or other consumer products. The chart is only illustrative, and may exclude brands with a very
small market presence, or those that have been withdrawn.
© Third Eyesight, 2012
1987
© Third Eyesight,
LICENSING
JV /
FRANCHISE
OWN

5. International Brands:
FDI & Move towards Control (2011)
Foreign Direct
Investment
100% Subsidiary
Or Joint Venture
(incl. minority stakes)
© Third Eyesight, 2012
Source: Industry Research by Third Eyesight
Note: This chart only includes apparel and accessory brands, and excludes other lifestyle product companies such as
fragrance, luggage, home, or other consumer products. The chart is only illustrative, and may exclude brands with a very
small market presence, or those that have been withdrawn.

6. Pause for a Question…
How suppliers in this room
can say that their sales curve
looks like this?
1990
1993
1996
1999
2002
2005
2008
2011
© Third Eyesight, 2012
1987

7. FDI is Not a Panacea –
The Implications Vary
Suppliers of raw material (fibre, yarn) and
intermediate materials (fabric)
Garment manufacturers
Garment brands
…some beneficial impact, but not uniformly
© Third Eyesight, 2012
Retailers

8. Opinion on Beneficial Impact
Retailers’ View
Greater Supply Chain
efficiency
Reduced lead times
Reduced cost
Fewer transportation legs
Source: Third Eyesight research
Greater efficiency
“Keeps suppliers on toes”
Beneficial from
manufacturer’s point-of-view
but not from intermediary’s
viewpoint
Reporting 10-25% higher
sales per square foot as
compared to traditional
retailing
© Third Eyesight, 2012
Modern Retail is helping
Supply chain “gain
importance in business”.
Suppliers’ View

9. Commercial / Structural Changes
Margin differential
– Bulk-pricing, discounts
– Consumer-oriented promotion schemes
Changes to standard shipment package sizes
Operating Procedures
Business Divisions dedicated to modern retail
Source: Third Eyesight research
© Third Eyesight, 2012
– Order booking processes
– Replenishment
– Invoicing

10. Technology Being Deployed
Packaging
Bar Coding
ERP – significant upgrade or even first-time
installation
Source: Third Eyesight research
© Third Eyesight, 2012
…Modest changes, but significant impact.

11. Impact
Major changes in operating processes
Inventory & Order Booking
– Better planning
– Better collaborative planning and forecasting
– Changes in replenishment strategies
Risk management communication systems (both
internal and external)
Source: Third Eyesight research
© Third Eyesight, 2012
Transport modes and procedures

12. Complexities and Friction Remaining
Size / scale / sophistication mismatch
Information imbalance / intermediaries
Corporate vs. small business owner
Rural vs. Urban
© Third Eyesight, 2012
Regulatory, governance

13. The Threatened, and Their Strategies
Large branded suppliers who have so far ruled the market
–
–
–
–
Fight for maintaining diversity in the market
Adapt business structures shifting balance of power
Maintain product and brand leadership
Exclusive stores or retail spaces to maintain brand integrity
Smaller retailers who are unable to enhance the value delivered to the
consumer
Intermediaries who are being squeezed out of the chain
– Wither, and die OR Evolve - e.g. from adati to packaged atta
12
© Third Eyesight, 2012
– Maintain and fight for operating cost competitiveness
– Evolve service and product niches for their market

14. India (1960s)
India (2010-20)
India (2005-10)
India
(1990s-2004)
India (1970s - )
India (1980s)
Devangshu Dutta, 2005
Contract
Manufacture
Trade Reliability
Design & Product
Intelligence
Consumer
Brand
© Third Eyesight, 2012
Consumer Relevance in major markets
Where is the Value?

15. This is a Decade of Opportunities
and of Waves of Turmoil
International brands: India is a new market
where a brand can “live out a whole lifecycle”
Indian companies: Look at moving up the
food chain: new launches, acquisitions
© Third Eyesight, 2012
Other Asian manufacturers: plug into the
Indian consumer supply pipeline

16. The Choice is:
Get rocked around by the waves
OR
Use the opportunties to “shape”
the waves in some way?
Focus on marketled development

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