INDIAN RETAIL INDUSTRY

Organized Vs Unorganized Retail Sector

Organized Retail Sector Unorganized Retail Sector

 Organized Vs Unorganized Retail Sector
Factor Organized Retail Sector Unorganized Retail Sector

Definition Modern form of retailing Traditional form of

retailing

Examples Hypermarket, Retail chain Mom n Pop stores, hand

etc. cart, pavement vendors etc

Market Share 3% 97%

Market Growth 35% 6%

Challenges Poor supply chain Use of labour intensive

management, aggressive technology, lack of
expansion etc. government support etc.
 Retail Trade – India, USA, China
Country Trade ($b) Employment Shops (mn) Organized
sector

India 180-394 7 1.2 2-3

China 360 12 2.7 20

UAS 3800 12.6-16 15.3 80

 Key Growth Drivers
• Economic Growth

• Demographics

• Urbanization

• Credit availability
Different Formats
Big Shots of the Industry
1) Pantaloon Retail
2) Raheja Group
3) Reliance Retail
4) Tata Group
5) RPG Group
6) Landmark Group
7) Piramal Group
8) Bharti - Walmart
9) A V Birla Group
Pantaloon Retail
 Headquartered in Mumbai 450 stores across the country
employing more than 18,000 people.

 All India space- 5 mn sq.ft, expecting to reach 30 mn by 2010.

 Various segment including food & grocery, home solutions,

consumer electronics, Health & Beauty product etc.

 Recent Innovations include e-commerce ‘Hybrid Format of

‘Small shops’
Raheja Group
 First Departmental store in India, SHOPPER’S STOP

 Member of IGDS

 7,52,000 sq.ft. retail space with turnover of 6.75 millions

 Crossword, Mothercare, Home stop etc.

 MOU with Home retail group of UK

 Plan to establish network of 55 hypermarkets across the

country with sales turnover of US$ 100 million by2010.
Reliance Retail
 More than 300 Reliance fresh store and first Reliance Mart
hypermarket in Ahmedabed

 Expansion in two tier cities like Vijaywada, Pune, Ludhiana etc

 Investment of Rs.30,000 cr to set up new formats of retail ,

expecting sales of Rs.90,000 cr by 2010
Tata Retail
Group
 Established in 1998

 Trent- subsidies of Tata group operates Westside and Star

India Bazaar, Croma

 Plans to pen more than 27 stores across its retail formats

adding 1.5 mn sq.ft. of space in the next 12 DLF malls
A V Birla Group
 Strong presence in apparel- Madura Garments

 Owned Brands like Louis Phillipe, Van Heusen, Allen Solly,

Peter England

 Investment plan – Rs.8000-9000 cr in the first 3 years till 2010

 “MORE” range of 15 supermarkets open at Nashik, Pune &

other two tier cities
 Merger & Acquisition
Considerati
Year Acquired/ JV Company on
/ Target
Acquirer Nature of Business Stake (US$
million)
2005 Liberty shoes Future Group Retail (footwear) 51% 3

2005 Indus- league clothing Future Group Retail Clothing 68% 5

2005 Odyssey India Deccan Leisure Retail chain 100% 14

Chronicle (books, music, toys)
holdings
2005 Landmark Tata Trent Books, Music, 74% 24
Accessories
2006 Bistro hospitality TGI Friday’s Restaurant 25% N/A

2006 Indus League clothing Etam Group, Lingerie & women’s 50% 8
France wear retailing
 Map of India’s Income class
1994 – 1995 1999 – 2000 2007 – 2008

Rich (Annual income >US$ 4700) 1 mn household 3 mn HH 6 mn HH

Benefit Maximize: Owns CAR, PC

Consuming (US$ 1000- 4700) 29 mn HH 55 mn HH 75 mn HH

Cost-benefit optimizer: have bulk of
branded consumer goods, 70% of 2-
wheelers, refrigerators, washing
machine

Climbers (US$ 500-1000) 48 mn HH 66 mn HH 78 mn HH

Cash-constrained benefit seekers:
have at least one major durable(mixer,
sewing machine, television)
Aspirants (US$ 350-500) 48 mn HH 32 mn HH 33 mn HH
New entrants into consumption:
have bicycle, radio, fans

Destitute (Less than US$ 350) 35 mn HH 24 mn HH 17 mn HH

Hand to mouth existence: Not
buying

Source: Ernst & Young

 Consumer Dynamics
• Youngest population on the globe
• Growth pace of the Indian economy
• 97% retail market is untouched by organized
retailers
• Food & Grocery …………………. 55%
• Consumption is moving out of the home
• Indian consumers has grown richer…
Strengths weakness

Technology Incentive Low conversion level

Super Market Stocks Customer Loyalty
Rising Disposable Income Underdeveloped supply chain
Increase in number of people in earner Lack of adequate utilities
category

opportunity threat

Large consumer market High market share of unorganized

Growth of Organized sector market
Rural Retailing Shopping Culture
Potential for Investment Poor inventory turns & stock availability
measures
Inflation