retail industry shreeja

8/4/2019 Retail Industry Shreeja

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RETAIL INDUSTRY 2007By,

Himanshu S Jha

Shreeja Banerjee


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Agenda Definition

Global Scenario

Indian Scenario

Value Chain


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Cont Growth drivers

Issues and challenges

Herfindahl Index

Michel Porter Analysis

Outlook


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Definition: -

The sale of goods orcommodities in small

quantities directly toconsumers.


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Global Scenario Global Industry size exceeding US $ 6.6

trillion

Second largest industry in US WalMart the largest retailer in the world

Annual sales of Wal-Mart US $ 284

The industry employs 22 mn in America

The annual sales crosses US $ 3 trillion


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Indian Scenario Having 300 mn middle class

families

Largest among the all the industries

Contribution of 10% in GDP and

8% of employment

4th fastest growing


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Cont Current size US $ 7.5

bn in organized

Growing @ 5%annually

Food is dominating and

growing @ 9 %

annually Only 2 to 4 % is

organized

INDIA TOTAL RETAIL MARKET SIZE

201 204238 278

321

368

421

0

50

100

150

200

250300

350

400

450

1998 2000 2002 2004 2006 2008E 2010E

YEAR

US$

bn

Source: Economic intelligence unit,

A.T.Kearny analysis


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Cont Expected to grow 25 % annually

Investing US $ 3.4 bn Reliance is the largest

Total market capitalization around US $175200 bn by 2016

Mobile phone retail industry is having US $16.7 and growing at 20% annually.

Around US $ 400 bn turn over in overallsector


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Key factorsR

E

A

S

O

N

S

F

O

R

G

R

O

W

T

H

Indias booming economy

Rise in young working population

Customer aspiration

More nuclear families in urban areas

Rise in the no. of workingwomen

More disposable income

Western influencesGrowth in expenditure


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Value Chain

Raw Mat.

LogisticsValue

Added

Services

Retail Mgt.

Institute

Interior

Decorator

ValueChain


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Underdeveloped Supply chain

Generic Infrastructure Issue Generic Policy Issue

Specific Infrastructure Issue Specific Policy Issue

Inadequate

UtilitiesIT

Infrastructure

Hurdles

Supply BaseHurdles

Inadequate HR

Ltd Consumer

Insights

Taxation

Hurdles

Real Estate

Hurdles

Insufficient.

Govt.

Incentives

Policy Related

Hurdles

Key Issues In The Indian Retail Sector


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Retail Space: -

Starting from 1 mn square feet, it has reached

40 mn square feet.

Companies Investment Occupation

Reliance Retail US $ 3.77 bn 205 Stores

DLF US $ 4.02 bn 20 large malls

Plaza Center (Israeli) US $ 1.25 bn 50 malls

Spencer US $ 125.89 500 stores

Hypercity 250 stores


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Kids retail

Monalisa, the Versace of kids, coming to India.

International brand Zapp tied up with Raymond

Disney launched exclusive chains, which stockcharacter-based stationery.

Pantaloon's joint venture with Gini & Jony

Swiss kidswear brand Milou is collaborating withTirupur-based Sreeja Hosieries.


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Mobile Industry

Already of US $ 17.33

Growing @ 1520 %

Fastest growing market

Accounting for 8.5 % of worldwide sales


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Cont

Subhiksha and Big Bazaar

Companies Investment

Essar Group US $ 278.56-334.24 bn

Spice Group US $ 123.8 bn


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Discount mall

The retailers coming to India to sell 3040 %

cheaper e.g.

Royal Palms is developing Orchard Roadmall


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Rural Retail: -

Changing

consumption pattern

Increased access to IT

Rising

purchasingpower

Cause of growth


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Cont

It is estimated to cross US $ 45.32 bn by 2010

Govt. of India is also planning to tap US $100 bn

It has double growth then urban


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Agri Retail

ITC after establishing 6,400 kiosks to increase

its e-Choupal footprint

It is already covering 400,000 farmers isplanning

It will be adding 20,000 more kiosks and 10

million farmers. Adani Agrifresh plans to invest US$ 251.79

million in the next three years


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International Retail

Wal-Mart, has tied-up with Sunil Mittal's BhartiEnterprises

Microsoft's first shop-in-shop + Tata Group

Gucci in Mumbai.

Apple Inc + Reliance Retail + "iStore by RelianceDigital".


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FORMAT KEY PLAYERS IN ORGANISED RETAIL

FOOD AND GROCERY Food Bazar, Food World, Subhiksha, Nilgiri, Trinetra, Big Bazaar, Spencer's

FOOD AND BEVERAGE Barista, Caf Coffee Day, Mc Donald's, Pizza Hut, Haldirams

DEPARTMENT STORES Shoppers Stop, Lifestyle, Wetside, Globus, Piramyd

PHARMACY Health and Glow, CRS, 98.4, Apollo Pharmacy

BOOKS, MUSIC & GIFTS Landmark, Crossword, Archies, Music World, Planet M


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Challenges

Behavior

al

pattern

Lack of

Retail

space

Trained

Manpower

Shortage

Discount

ing


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Value of Herfindahl Index- 4003.4935

Index implies high competition amongst players

Market share of the major playersCompanies Market Share (%)

Pantaloons 59.85

Provogue 13.52

Shoppers Stop 10.09

Trent 8.62

Vishal 7.91


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Michel Porter Analysis of Indian Retail Industry

Threat of New Entrant: High to Moderate

In orgainsed sector, licensing is the threat

Increasing demand of Real estate in India

Having Majority of unorganised sectorOnly 51% FDI Allowence

Bargaining power of supplier: Less

The consumers are having in a comfortable position to influence the prices due large in number

Competitive rivalry: High

Since there are too many players in the market so the competitiveness is very high

Due to changing taste of the consumer, the cut throat competition is prevailing

Bargaining power of Buyers: Moderate to High

Owing to having large in number, the buyers are having in a comfortable position to bargain

Owing to having large numbers of unorgainsed players, the buyers are having in a comfortable position to bargai

Since there are some organised sector also in india, so the buyers facilities are moderate

Threat of substitute: High

In retailing there are various sorts of substitution in the market


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Conclusion:-

It will curb inflation

By 2010 it will touch organized sector 10 %

out of total (US $ 30 bn) Govt. allows 51% FDI, so it will be more

competitive

Cheap brand is coming, consumer will bebenefited


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Cont

Predicted mall distribution space in india

30%

27%7%5%

5%

26% Delhi & NCR

Mumbai

Hyderabad

Pune

Bangalore

Tier II cities

Metro cities will bewitnessing a robustgrowth

Globalization andincreasing purchasingpower will boost retailrevenue.

Changing face of Indiawill attract foreignbrands


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