TRENDS IN RETAILING

Presented by : D.Soma shekhar reddy The oxford college of business management

TRENDS IN RETAILING

The Indian Retail Sector – Business Understanding

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RETAIL:

The word RETAIL is in fact derived from the french word RETAILLIER which means to cut off a piece (or) to break bulk.

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RETAILING: Retailing can hence be considered as the last

stage in the movement of goods (or) services to the consumer. Put simply any firm that sells products to the final consumer is performing the function of retailing. It thus consist of all activities involved in the marketing of goods and services directly to the consumers for their personal, family (or) household use.

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TOP5 RETAIL STORES IN WORLD:

• 1.WAL MART u.s.a 1383000 employees.• 2.TESCO u.k 171794 employees.• 3.CARREFOUR france 382821 employees.• 4.HOMEDEPOT u.s.a 256300 employees.• 5.KROGER u.s.a 288000 employees.

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FACTS ABOUT RETAIL IN INDIA:

* India is 2nd fastest growing economy in the world.* More English speaking people.* 2nd most attracting developing market, head of china.* AT Kearney has estimated India's total retail market at US $ 202.6 billion which is expected to grow at a compounded 30% over the next five years.

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TOP 10 RETAIL PLAYERS IN INDIA:

• Shoppers' Stop (k.raheja)1991.• Westside (Trent) (tata)1998.• Pantaloon (Big Bazaar) (future group)1997.• Lifestyle (land mark group)• RPG Retail (Foodworld, Musicworld) (rpg enterprises)• Crossword (shopper’sstop)1992.• Wills Lifestyle (itc)• Globus (rajan raheja group)1998.• Piramals ( Pyramid & Crosswords) 1999. • Ebony Retail Holdings Ltd. 1994.

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IMPACT OF MNC’S ENTER INTO RETAIL MARKET IN INDIA:

• FAVOURABLE IMPACTS: The job opportunities are high in retail industry. The customers enjoy and experience the shopping. The good quality products with lower cost because of

no intermediaries.

• Unfavorable: The local vendors (or) street vendors are very much

affected.

Driven from Consumption Throughout the 1.1 Billion Population

5-7 million

Super Rich

70 – 80 million

Afford Cars, Private Healthcare & Foreign travel

250 - 300 million

Afford goods like Refrigerators , Scooters & Colour TVs

600-700 million (Generally Rural)Afford simple industrial products

e.g. bicycles , radios , textilesPoverty Line = income less than $ 1/day

Source: McKinsey,

60 % of India’s population are under 24 years

Weekly MarketsVillage Fairs

Melas

Convenience StoresMom and Pop/Kiranas

PDS OutletsKhadi StoresCooperatives

Exclusive Brand OutletsHyper/Super Markets

Department StoresShopping Malls

Traditional/Pervasive Reach

Government Supported

Historic/Rural Reach

Modern Formats/ International

Evolution of Indian retail

Source of Entertainmen

t

Neighborhood Stores/Convenie

nce

Availability/ Low Costs / Distribution

Shopping Experience/Efficie

ncy

Recent Trends

Experimentation with formats: Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out. Ex. Quasi-mall, sub-urban discount stores, Cash and carry etc.

Store design : Biggest challenge for organized retailing to create a “customer-pull” environment that increases the amount of impulse shopping. Research shows that the chances of senses dictating sales are upto 10-15%. Retail chains like MusicWorld, Baristas, Piramyd and Globus are laying major emphasis & investing heavily in store design.

Emergence of discount stores: They are expected to spearhead the organized retailing revolution. Stores trying to emulate the model of Wal-Mart. Ex. Big Bazaar, Bombay Bazaar, RPGs.

Unorganized retailing is getting organized: To meet the challenges of organized retailing such as large Cineplex's, and malls, which are backed by the corporate house such as 'Ansals' and 'PVR‘ the unorganized sector is getting organized. 25 stores in Delhi under the banner of Provision mart are joining hands to combine monthly buying. Bombay Bazaar and Efoodmart formed which are aggregations of Kiranas.

Experimentation with formats: Retailing in India is still evolving and the sector is witnessing a series of experiments across the country with new formats being tested out. Ex. Quasi-mall, sub-urban discount stores, Cash and carry etc.

Store design : Biggest challenge for organized retailing to create a “customer-pull” environment that increases the amount of impulse shopping. Research shows that the chances of senses dictating sales are upto 10-15%. Retail chains like MusicWorld, Baristas, Piramyd and Globus are laying major emphasis & investing heavily in store design.

Emergence of discount stores: They are expected to spearhead the organized retailing revolution. Stores trying to emulate the model of Wal-Mart. Ex. Big Bazaar, Bombay Bazaar, RPGs.

Unorganized retailing is getting organized: To meet the challenges of organized retailing such as large Cineplex's, and malls, which are backed by the corporate house such as 'Ansals' and 'PVR‘ the unorganized sector is getting organized. 25 stores in Delhi under the banner of Provision mart are joining hands to combine monthly buying. Bombay Bazaar and Efoodmart formed which are aggregations of Kiranas.

Recent changes:Recent changes:

Unorganized : Vast majority of the twelve million stores are small "father and son" outlets

Fragmented : Mostly small individually owned businesses, average size of outlet equals 50 s.q. ft. Though India has the highest number of retail outlets per capita in the world, the retail space per capita at 2 s.q. ft per person is amongst the lowest.

Rural bias: Nearly two thirds of the stores are located in rural areas. Rural retail industry has typically two forms: "Haats" and “Melas". Haats are the weekly markets : serve groups of 10-50 villages and sell day-to-day necessities. Melas are larger in size and more sophisticated in terms of the goods sold (like TVs)

Unorganized : Vast majority of the twelve million stores are small "father and son" outlets

Fragmented : Mostly small individually owned businesses, average size of outlet equals 50 s.q. ft. Though India has the highest number of retail outlets per capita in the world, the retail space per capita at 2 s.q. ft per person is amongst the lowest.

Rural bias: Nearly two thirds of the stores are located in rural areas. Rural retail industry has typically two forms: "Haats" and “Melas". Haats are the weekly markets : serve groups of 10-50 villages and sell day-to-day necessities. Melas are larger in size and more sophisticated in terms of the goods sold (like TVs)

Traditionally three factors have plagued the retail industry:

Traditionally three factors have plagued the retail industry:

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India vs. World• Indian retail is fragmented with over 12 million outlets operating in the country.

This is in comparison to 0.9 million outlets in USA, catering to more than 13 times of the total retail market size as compared to India

• India has the highest number of outlets per capita in the world - widely spread retail network but with the lowest per capita retail space (@ 2 sq. ft. per person)

• Annual turnover of Wal-Mart (Sales in 2001 were $219 billion) is higher than the size of Indian retail industry. Almost 100 times more than the turnover of HLL (India's largest FMCG company).

• Wal-Mart - over 4,800 stores (over 47 million square meters) where as none of India's large format store (Shoppers' Stop, Westside, Lifestyle) can compare.

• The sales per hour of $22 million are incomparable to any retailer in the world. Number of employees in Wal-Mart are about 1.3 million where as the entire Indian retail industry employs about three million people.

• One-day sales record at Wal-Mart (11/23/01) $1.25 billion - roughly two third of HLL's annual turnover.

• Developed economies like the U.S. employ between 10 and 11 percent of their workforce in retailing (against 7 percent employed in India today).

• 60% of retailers in India feel that the multiple format approach will be successful here whereas in US 34 of the fastest-growing 50 retailers have just one format

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Recent Trends

• Retailing in India is witnessing a huge revamping exercise as can be seen in the graph

• India is rated the fifth most attractive emerging retail market: a potential goldmine.

• Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade) makes up 3 percent or US$ 6.4 billion

• As per a report by KPMG the annual growth of department stores is estimated at 24%

• Ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney.

Retail Sales in India

India Retail Market

• 720 million Indians to join consuming age by 2010 • 55% of the Indian population will be under 20 years of age

by 2015 • 32% rise in urbanization by 2008 • 10% annual growth in Retail market since 2000 • 7% of the population is engaged in retailing • A booming US$ 300 billion retail market in India • 5.5 retail outlets per 1000 population, highest in the world • 25-30% annual growth in retail loans and credit cards

FORMAT % SHARE

Hypermarket 38%

Supermarket 28%

Specialty Store 22%

Cash N’ carry 16%

Department Stores 2%

Format-wise urban investments in retail expected in next 5 years

Source: Technopak Analysis

Indian Organised Retail is set to explode with Food & Lifestyle retail as major segments

3 SBU’s covering 88% of market segment!!

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Indian consumers are evolving…• From traditional to…

…. modernized traditional

• From globalize to…

… Indianise

• From functional to…

… lifestyle

Evolving consumer preferences !

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Indian consumers are evolving…• From value for money to…

… value for time and convenience

• From cautious to…

… experimentationFrom over-the-counter to…

… touch-and-feel

Evolving consumer preferences !

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Tasks for suppliers !

Participate in Agri Infrastructure: Logistics

THE CHANGE… A SHIFTFROM SHOPS TO BRANDS

FROM TALKIES TO MULTIPLEXFROM KIRANA TO MALLS…

Recent Trends …..

• The retail sector has played a phenomenal role throughout the world in increasing productivity of consumer goods and services.

• The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. But all of them have not yet tasted success because of the heavy initial investments that are required to break even with other companies and compete with them. The India Retail Industry is gradually inching its way towards becoming the next boom industry.

Final words……..

Message to Retailers:•Evolve your all strategies around customers.•Focus on building brands to reap the fruits in future.•Keep growing.•“Customers is king of Past and now the Emperor of Future.”

Message to Customers:“Enjoy the Kingdom of Retailers”