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Situation Analysis Of Retail Industry In India
Agenda: Situation Analysis
Retailing: Introduction
Evolution of Retail Industry

Indian Retail Market Analysis & Summary

SWOT Analysis
Challenges

Competition

Key To Success




                                     2
Retailing: Introduction
               • Retail has played a major role world over in
                 increasing productivity across a wide range of
                 consumer goods and services

               • Retailing is one of the important sectors of an
                 economy, both in terms of contribution to GDP
                 and share in the total employment.
INTRODUCTION
               • India is the fifth largest retail market in the
                 world

               • The Indian retailing sector is at an inflection
                 point. It is set to enter a new growth trajectory
                 owing to rising household consumption and the
                 entry of corporate entities and global retailers.



*                                                 3
Evolution of Retail Industry
              Traditionally retailing in India can be traced to -

              •   Weekly Markets Village Fairs & Melas.

              •   The emergence of the neighborhood ‘Kirana’
                  stores catering to the convenience of the
                  consumers
An overview
              •   Era of government support for rural retail:
                  Indigenous franchise model of store chains run by
                  Khadi & Village Industries Commission

              •   The latter half of the 1990s saw a fresh wave of
                  entrants with a shift from Manufactures to Pure
                  Retailers.

              •   Emergence of hyper and super markets trying to
                  provide customer with 3 V’s -
                  Value, Variety and Volume
                                                     4
Evolution of Indian retail                                       Modern Formats/
      Historic/Rural        Traditional/Pervasiv   Government
                                                                         International
          Reach                   e Reach           Supported

                                                                        Exclusive Brand Outlets
                                                                        Hyper/Super Markets
                                                                        Department Stores
                                                                        Shopping Malls

                                                   Khadi & Village
                                                   Stores
                                                   Cooperatives

                          Convenience Stores
                          /Kiranas

    Weekly Markets
    Village Fairs
    Melas
                                                    Availability/ Low
            Source of            Neighborhood            Costs /              Shopping
          Entertainment       Stores/Convenience      Distribution      Experience/Efficiency



*
                                                                          5
Top Player Of Retail- Worldwide


               Rank Retailer             Home Country

               1 Wal-Mart Stores, Inc.        U.S.A.
Top retailer
               2 Home Depot, Inc.             U.S.A
               3 The Kroger Co.               U.S.A.
               4.Costco                       U.S.A.
               5 Target                       U.S.A.




                                          6
Major player of Indian Retail
                   • Shoppers' Stop
                   •Westside (Trent)
                   •Pantaloon (Big Bazaar)
                   •Lifestyle
                   •RPG Retail (Food world, Music world)
                   •Crossword
    Retailers Of   •Wills Lifestyle
       India       •Globus
                   •Piramals ( Pyramid & Crosswords)
                   •Ebony Retail Holdings Ltd.




*                                                    7
MARKET ANALYSIS

           • INDIAN RETAIL MARKET ANALYSIS &
            SUMMARY

Market     • TARGET MARKET
Analysis
           • MARKET TREND
           • MARKET DEMOGRAPHICS
           • MARKET GROWTH

                                    8
Indian Retail Market Analysis & Summary

                     Retailing in India can be classified under two
                      broad headings: Organized and Unorganized.
                     Currently, the size of Indian retail sector is US$
                      410billion with unorganized retail.
                     Organised retail trade accounts for merely 4%
  Indian retail       of the total retail trade and is expected to
                      grow at the rate of 30% to 40%.
                     The sector can be broadly divided into two
                      segments: Value retailing, which is typically a
                      low margin-high volume business (primarily
                      food and groceries) and Lifestyle retailing, a
                      high margin-low volume business (primarily
                      apparel, footwear, etc).




                                                       9
Organised Retail Market
                             Organised retail pie
               Segment                        % contribution
               Textile and apparel                      38.9
               Food and beverages                       10.5

               Consumer durables                         9.0
Segmentation
               Home solutions                            6.7
               Jwellery and watches                      6.3

               Books, music and gifts                    3.2

               Pharma                                   2.1
               Others                                  23.3




                                            10
TARGET MARKET
         A segment of consumers that is most likely
         to purchase the products and services
         offered by a particular retailer
         When defining the target market, retail
         organizations generally identify
MARKET   demographic, socioeconomic, and
TARGET   psychographic characteristics, and then
         use that data to focus and guide their
         marketing, advertising, promotion, and
         merchandising efforts.




                                     11
MARKET TRENDS
         The whole concept of shopping has altered
         in terms of format and consumer buying
         behavior, ushering in a revolution in
         shopping in India. Modern retail has
         entered India as seen in sprawling shopping
MARKET   centers, multi-storied malls and huge
TRENDS   complexes offer shopping, entertainment
         and food all under one roof.




                                     12
MARKET DEMOGRAPHICS
CONTEXT                        TYPE OF INFORMATION
Socio-demographic              Population composition and distribution
                               Households and family formation
                               Health and health services
                               Learning and educational services
                               Housing conditions
                               Peace and order status
Economic activity              National accounts
                               Labor force participation
                               Wages
                               Household income and expenditure
                               patterns
                               Poverty
Socio-cultural and political   Political structure
                               Political participation
                               Relevant laws, statutes, policies
                               Predominant social structure
                               Gender roles in the household
                               Time use
         *Data from NCAER      Decision- making patterns in the
                               household             13
MARKET GROWTH
         •It is estimated that the retailing industry is likely to
         grow up to $427 billion by 2010 and US$637 billion by
         2015 and that organized retail could account up to a
         share as high as 20%-22% of this market.

         •Organized retail will grow at a significant CAGR of
MARKET   around 50% till 2011 mainly due to the investments of
GROWTH   more than $30 billion budgeted by big and small
         players in the organized retail sector over coming
         five to seven years. Organized retail sector has
         witnessed a CAGR of around 35% over the past five
         years and currently accounts for about 1.5% of the
         country’s GDP.




                                              14
MARKET RETAIL GROWTH




*                          15
SWOT Analysis

           •   Products are cheaper than the market
               price.
           •   Technology intensive industry
           •   Variety in products
           •   Demographic favor
Strength
           •   Rising disposable income
           •   Urbanization
           •   Shopping convenience
           •   Low labor cost of skilled ones
           •   Plastic card revolution




                                       16
SWOT Analysis
           •   Has not yet trapped the whole market.
           •   Facing problems due to political
               environment
           •   Less conversion level
           •   Customer loyalty
Weakness
           •   Policy related issues
           •   Limited consumer insight
           •   Inadequate human resources
           •   Taxation hurdle
           •   Underdeveloped supply chain
           •   Lack of adequate facilities




                                       17
SWOT Analysis

             •   Kids and teens retailing segment
             •   Percolating down
             •   Rural retailing
             •   Sectors for high growth potential
OPPORUNITY   •   Locational advantage
             •   Falling real estate cost
             •   E-retailing
             •   Franchising




                                           18
SWOT Analysis

              •    Shopping culture
              •    Political issues
              •    Social issues
              •    Lack of differentiation among the malls
    THREATS       that are coming
              •    Poor inventory turns and stock
                  availability measures




*                                           19
CHALLENGES IN RETAIL SECTOR
                 •The organized retail industry in India is facing…
                 competition from the unorganized sector.

                 •Intensifying competition is exerting downward
                 pressure on prices.
                 •
                 • The industry is facing a severe shortage of
    CHALLENGES   talented professionals, especially at the middle-
                 management level.

                 •Supply chain management.
                 •Lack of adequate infrastructure.
                 •Differential tax rates.

*                                                 20
KEY TO SUCCESS


                        Price
                        Customer Delight
                        Schemes
    Success Points      Availability of all types/ brands
                        Quality of products




*                                                    21
THANK YOU


Presented By   KUMAR RAMA SHANKAR
               HRD-09-6134




                                    22

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Situation Analysis Of Retail Industry In India

  • 2. Agenda: Situation Analysis Retailing: Introduction Evolution of Retail Industry Indian Retail Market Analysis & Summary SWOT Analysis Challenges Competition Key To Success 2
  • 3. Retailing: Introduction • Retail has played a major role world over in increasing productivity across a wide range of consumer goods and services • Retailing is one of the important sectors of an economy, both in terms of contribution to GDP and share in the total employment. INTRODUCTION • India is the fifth largest retail market in the world • The Indian retailing sector is at an inflection point. It is set to enter a new growth trajectory owing to rising household consumption and the entry of corporate entities and global retailers. * 3
  • 4. Evolution of Retail Industry Traditionally retailing in India can be traced to - • Weekly Markets Village Fairs & Melas. • The emergence of the neighborhood ‘Kirana’ stores catering to the convenience of the consumers An overview • Era of government support for rural retail: Indigenous franchise model of store chains run by Khadi & Village Industries Commission • The latter half of the 1990s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers. • Emergence of hyper and super markets trying to provide customer with 3 V’s - Value, Variety and Volume 4
  • 5. Evolution of Indian retail Modern Formats/ Historic/Rural Traditional/Pervasiv Government International Reach e Reach Supported Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls Khadi & Village Stores Cooperatives Convenience Stores /Kiranas Weekly Markets Village Fairs Melas Availability/ Low Source of Neighborhood Costs / Shopping Entertainment Stores/Convenience Distribution Experience/Efficiency * 5
  • 6. Top Player Of Retail- Worldwide Rank Retailer Home Country 1 Wal-Mart Stores, Inc. U.S.A. Top retailer 2 Home Depot, Inc. U.S.A 3 The Kroger Co. U.S.A. 4.Costco U.S.A. 5 Target U.S.A. 6
  • 7. Major player of Indian Retail • Shoppers' Stop •Westside (Trent) •Pantaloon (Big Bazaar) •Lifestyle •RPG Retail (Food world, Music world) •Crossword Retailers Of •Wills Lifestyle India •Globus •Piramals ( Pyramid & Crosswords) •Ebony Retail Holdings Ltd. * 7
  • 8. MARKET ANALYSIS • INDIAN RETAIL MARKET ANALYSIS & SUMMARY Market • TARGET MARKET Analysis • MARKET TREND • MARKET DEMOGRAPHICS • MARKET GROWTH 8
  • 9. Indian Retail Market Analysis & Summary  Retailing in India can be classified under two broad headings: Organized and Unorganized.  Currently, the size of Indian retail sector is US$ 410billion with unorganized retail.  Organised retail trade accounts for merely 4% Indian retail of the total retail trade and is expected to grow at the rate of 30% to 40%.  The sector can be broadly divided into two segments: Value retailing, which is typically a low margin-high volume business (primarily food and groceries) and Lifestyle retailing, a high margin-low volume business (primarily apparel, footwear, etc). 9
  • 10. Organised Retail Market Organised retail pie Segment % contribution Textile and apparel 38.9 Food and beverages 10.5 Consumer durables 9.0 Segmentation Home solutions 6.7 Jwellery and watches 6.3 Books, music and gifts 3.2 Pharma 2.1 Others 23.3 10
  • 11. TARGET MARKET A segment of consumers that is most likely to purchase the products and services offered by a particular retailer When defining the target market, retail organizations generally identify MARKET demographic, socioeconomic, and TARGET psychographic characteristics, and then use that data to focus and guide their marketing, advertising, promotion, and merchandising efforts. 11
  • 12. MARKET TRENDS The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping MARKET centers, multi-storied malls and huge TRENDS complexes offer shopping, entertainment and food all under one roof. 12
  • 13. MARKET DEMOGRAPHICS CONTEXT TYPE OF INFORMATION Socio-demographic Population composition and distribution Households and family formation Health and health services Learning and educational services Housing conditions Peace and order status Economic activity National accounts Labor force participation Wages Household income and expenditure patterns Poverty Socio-cultural and political Political structure Political participation Relevant laws, statutes, policies Predominant social structure Gender roles in the household Time use *Data from NCAER Decision- making patterns in the household 13
  • 14. MARKET GROWTH •It is estimated that the retailing industry is likely to grow up to $427 billion by 2010 and US$637 billion by 2015 and that organized retail could account up to a share as high as 20%-22% of this market. •Organized retail will grow at a significant CAGR of MARKET around 50% till 2011 mainly due to the investments of GROWTH more than $30 billion budgeted by big and small players in the organized retail sector over coming five to seven years. Organized retail sector has witnessed a CAGR of around 35% over the past five years and currently accounts for about 1.5% of the country’s GDP. 14
  • 16. SWOT Analysis • Products are cheaper than the market price. • Technology intensive industry • Variety in products • Demographic favor Strength • Rising disposable income • Urbanization • Shopping convenience • Low labor cost of skilled ones • Plastic card revolution 16
  • 17. SWOT Analysis • Has not yet trapped the whole market. • Facing problems due to political environment • Less conversion level • Customer loyalty Weakness • Policy related issues • Limited consumer insight • Inadequate human resources • Taxation hurdle • Underdeveloped supply chain • Lack of adequate facilities 17
  • 18. SWOT Analysis • Kids and teens retailing segment • Percolating down • Rural retailing • Sectors for high growth potential OPPORUNITY • Locational advantage • Falling real estate cost • E-retailing • Franchising 18
  • 19. SWOT Analysis • Shopping culture • Political issues • Social issues • Lack of differentiation among the malls THREATS that are coming • Poor inventory turns and stock availability measures * 19
  • 20. CHALLENGES IN RETAIL SECTOR •The organized retail industry in India is facing… competition from the unorganized sector. •Intensifying competition is exerting downward pressure on prices. • • The industry is facing a severe shortage of CHALLENGES talented professionals, especially at the middle- management level. •Supply chain management. •Lack of adequate infrastructure. •Differential tax rates. * 20
  • 21. KEY TO SUCCESS  Price  Customer Delight  Schemes Success Points  Availability of all types/ brands  Quality of products * 21
  • 22. THANK YOU Presented By KUMAR RAMA SHANKAR HRD-09-6134 22