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Indian retailing industry

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Retailing industry
Introduction

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About retailing
industry
Retail industry in India is undoubtingly one of the
fastest growing retail industry in the world. It is
the largest among all industries accounting to 10
per cent of the country GDP and employs around
8 per cent of the workforce.
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Indian retailer industry size and growth
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Modern retailing
Modern trade is a trading method that is
a new form of trading that includes
large stores, outlets, retail brands, along
with the franchise system.
The customer himself chose or picked
the products displayed.
In modern trade, the product variety is
excessive.
Modern trade includes the larger players
such as supermarket chains, mini-
markets (Indonesia), hypermarkets, etc.
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Traditional retailing
Traditional trade is associated with a
complex network of small retailers,
dealers, wholesalers, distributors, open
markets, corner stores, and street
vendors.
In traditional trade, brand choice is
either limited to what is available or
requires the shopper to ask for it by
name.
Traditional trade requires the presence
of the shop and display of all items on
sale.
In traditional trade the product variety
is limited.
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MODERN AND TRADITIONAL RETAILING

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Example of Indian
retailing industry
Hyper markets
Super markets
Corner stores Open market

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Problem in
Indian retailing
industry
The Indian retail industry is one of the top five retail
industries in the world and has emerged as the most
dynamic and fast – paced industry. The Indian retail
market is expected to nearly double by 2020 from 2015.
But there are some challenges the retail industry is
facing in India.
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The Problem in retailing industry in India
Lack of Infrastructure
Infrastructure does
not have strong base
in India. Organization
and Globalization are
compelling
companies to
develop
infrastructure.
Inefficient Supply Chain
Management
Delivering the right
goods at right time
at right place is very
important . In India,
there is lack of
efficient Supply
Chain Management
Frauds in Retail
Frauds, including
vendor frauds,
theft, shoplifting
and inaccuracy in
supervision and
administration are
the challenges that
are difficult to
handle.
Price War
There is price war
between different
retail organizations.
Every organization is
trying to provide
goods at low cost and
offers various
promotional schemes.
Competition from
Unorganized Retail
Competition from
the unorganized
retail sector is the
major challenge
for the organized
retail outlets.

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The solution in retailing industry in India
Focus in
unorganized
sector
Efficient Supply
Chain Management
Fixed the price Merge with
retailing
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Loyal with
customers

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Introduction
In simple words, FDI means the capital
inflows from abroad i.e. invested in or
to enhance the production capacity of
the economy. The FDI Policy is governed
by the Government of India and with the
provision of Foreign Exchange
Management Act (FEMA) 1999

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Entry Options for Foreign Players prior to FDI Policy
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Although prior to Jan 24, 2006, FDI was not authorized in retailing, most
general players had been operating in the country. Some entrance routes used
by investors have been explained below:-
Franchise Agreements
In franchising and commission agents’
services, FDI (unless otherwise
prohibited) is allowed with the
approval of the Reserve Bank of India
(RBI) under the Foreign Exchange
Management Act.
Strategic Licensing Agreements
Some foreign brands
give exclusive licences
and distribution rights to
Indian companies.
Manufacturing and Wholly
Owned Subsidiaries.
The foreign brands such as Nike,
Reebok, Adidas, etc. that have wholly-
owned subsidiaries in manufacturing
are treated as Indian companies and are,
therefore, allowed to do retail.

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100 % allowed
51%

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These is 100% FDI is allowed in
wholesale trading which involves
building of a large distribution
infrastructure to assist local
manufacturers. The wholesaler
deals only with smaller retailers
and not Consumers.
On 7 December 2012, the Federal
Government of India
allowed 51% FDI in multi-brand
retail in India. FDI in Multi Brand
retail implies that a retail store
with a foreign investment can sell
multiple brands under one roof.
In January 2012, India approved reforms for single-brand
stores welcoming anyone in the world to innovate
in Indian retail market with 100% ownership Products should
be sold under the same brand internationally. Any addition
to product categories to be sold under “single-brand”
would require fresh approval from the government.
FDI IN SINGLE BRAND, Cash and Carry model AND MULTI- BRAND

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BENEFITS AND CRITICISM OF FDI IN RETAILING
INDUSTRY
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Benefits of FDI
 Improves foreign exchange position of the country;
 Employment generation and increase in production ;
 Help in capital formation by bringing fresh capital;
 Helps in transfer of new technologies, management skills,
intellectual property
 Increases competition within the local market and this brings higher
efficiencies, helps in increasing exports, Increases tax revenues
Criticism of FDI
 Domestic companies fear that they may lose their
ownership to overseas company
 Small enterprises fear that they may not be able to
compete with world class large companies and may
ultimately be edged out of business;
 Such foreign companies invest more in machinery and
intellectual property than in wages of the local people;

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At present, foreign direct investment (FDI) in pure retailing is not
permitted under Indian law.
Government of India has allowed FDI in retail of specific brand of
products.
foreign companies in certain categories can sell products through their
own retail shops in the country.
FDI in retail trade has forced the wholesalers and food processors to
improve, raised exports, and triggered growth by outsourcing supplies
domestically.
FDI should be encouraged in the form of Joint Venture only e. g. India
is enjoying strong agriculture base.
ROLE OF FDI IN RETAILING INDUSTRY
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Current scenario of retailing
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At present the organized retail penetration is 7
percent and its expected to reach 10 percent
Goods and Services Tax (GST) is another major
step that has been taken in terms of retailing.
There has been a great penetration of the bigger
brands in smaller cities and people of India are
able to enjoy the top MNC brands that previously
were not in their reach.
Foreign Direct Investment is another vital reason
for increasing consumerism. With the
liberalization of FDI, there will be a hike in
investments pumped in by major companies.

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E- Retailing
Electronic retailing is the sale of goods and
services through the Internet. E-retailing can
include business-to-business (B2B) and
business-to-consumer (B2C) sales of products
and services. Amazon.com (AMZN) is by far
the largest online retailer providing consumer
products and subscriptions through its website.
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CONCLUSION
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The Indian retail sector is highly fragmented
with 97 per cent of its business being run by
the unorganized retailers.
The FDI in retail industry is likely to create
around 10 million jobs in the span of 10
years.
Retail sector is the largest source of
employment after agriculture, and has deep
penetration into rural India generating more
than 12% GDP of India.
 Retail industry can improve the condition of
agriculture sector because when goods are
purchased by these retailers directly from the
farmers, will reduce the price of vegetables
and other commodities as well.
Now it’s the requirements of the time that
India should allow FDI in all segments of
the retailing in India.

24.
Thank you!
Speaker Name: Shweta Chauhan