organized retail the opportunities ahead

Organized Retail

The Opportunities Ahead

Retail – the largest private industry in world economy

Source : Euromonitor, European Chemical Industry Council: Automotive News; Wall Street Journal; Chemical market Reporter; IDATE; Global Vantage

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Pharmaceuticals; diagnostice

telecom

Automotive

Electronics

Energy

Chenmicals

Packaged goods

Construction / Engineering

Financial services

Retail

Sales (USD Trillion) 1999

Retailing – the largest private industry in the world

• Over 50 of the Fortune 500 companies are retail companies.

• 25 of the Asian top 200 companies are retail companies.

• The world’s largest company is a retail company. (Wal-Mart – last valued at Rs 1,091,250 crore)

• Retail industry accounts for 35% of our GDP • Estimated industry size - USD 205 bn (INR 230,000

cr) in 2004.• Highest number of outlets per capita - 12 million

outlets • Lowest per capita retail space - 2 sft per person as

compared to 16 sft per person in USA• Only 4% of the country’s outlets are larger than 500

sft

Source: KSA Technopak

Current Retail scenario in India

India’s retail setup is therefore crowded with small outlets, largely disorganized and primarily owner managed

Organized Retail

Organized Retail arrived in India in the 90’s

• 1999 Rs 550 Crore

• 2002 Rs 4,000 Crore

• 2004 Rs 28,000 Crore

• 2005 Rs 35,000 Crore

Organised Retail Penetration

Examples of Growth in Emerging Markets

Years taken for organized retail to grow from <5% to over 20%

INDIA IS STILL AT 2.5%

Source : MG1, team analysis

Forecast 2010

• Organized retail is expected to grow at 30% - 35% p.a. to become USD 24 bn (INR 100,000 cr) by 2010

• Organized Retail Penetration (ORP) will increase from less than 3% in 2005 to 8% by 2010

• FDI in real estate will accelerate pace of development of retail infrastructure

• Investments in organized retailing are estimated to touch USD 4,000 Mn (INR 20,000 cr) by end of 2010

Source: KSA Technopak, HSBC Report

Development Curve of Organised Retail

India is one of the most youthful countries in the world with 53% of the

population less than 25 yrs of age

Growth Drivers - Young & rapidly evolving consumers

Within a decade the number of people in age group of 20 – 49 would

increase 30% from 395mn in 2000 to 510 mn in 2010

Currently estimated at 92 Mn the middle class (family income between INR 200,000 – 10,00,000 p.a.) is expected to be around 153 Mn by 2010

Growth Drivers – Middle Class Population

Growth Drivers – Retail Infrastructure

• India will have 225 malls by 2007 spread over 50 cities

• Relaxation in FDI in Real Estate to give further impetus

• Real Estate Mutual Funds ( REMFs) & Real Estate Investment Trusts ( REITs) comes to India

Organized Retail

Emerging Opportunities

Retail – Largest Employer in the World

Increased employment opportunities

- The annual employee turnover of Wal-Mart is more than the entire workforce of General Motors

- 18% of the US workforce is employed in retail

Socioeconomic Impact of McDonalds on the US Job Market

• Employs more than 5,00,000 people• Largest employer of High School Students • 12.5 % of the US workforce has worked for McDonalds• 1 out of 15 American got his/her 1st Job at McDonalds• Nations largest Job Training Organisation -Bigger than

the US Army – teaching the future US workforce “ work routines,job discipline and organisational teamwork

McDonalds captures 1 out of every 6 restaurant visits in the US market

Retail – Opportunities for Entrepreneurs

- World of Franchising

- Specialized retail formats

Bangles, Candy, Kite, - opportunities are immense !!