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Retailing in IndiaRetailing in India
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Industry Evolution
Traditionally retailing in India can be traced to The emergence of the neighborhood Kirana stores catering to the convenience ofthe consumers
Era of government support for rural retail: Store chains run by Khadi &Village Industries Commission along with government owned PDS and CSD.
In the 1980s,Textile sector with companies like Bombay Dyeing, Raymond's, SKumar's and Grasim first saw the emergence of retail chains
During the same period, Titan successfully created a modern retailing conceptand established a series of showrooms for its premium watches
Post 2000 onwards saw an emergence of organized retail formats, mainly in urban areas, with facilities like car parking targeted to provide a complete destination experience for all segments of
society
Emergence of hyper and super markets trying to provide customer with 3 Vs -Value, Variety and Volume
FDI limited to 51 % in single brand retail only.
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Weekly Markets
Village Fairs
Mom and
Pop/Kiranas
PDS Outlets
CSD
Exclusive BrandOutlets
Hyper/Super Markets
Department Stores
Traditional Government
Supported
Historic/Rural
Reach
Modern Formats/
International
Evolution of Indian retail formats
Source of
EntertainmentNeighborhood
Stores/Convenience
Availability/ Low
Costs /Shopping
Experience/Efficiency
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Retail Market PredictionRetail Market Prediction
300
427
637
0
100
200300
400
500
600
700
US $ Billion2006 2010 2015
Source :KSA Technopak
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What are the factors driving Retail growth in
urban India ?
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Increase in working population
Increase in number of double income households
Convenience
Change in consumer lifestyle
Incentives offered by organizations to its
employees for shopping
Shopping + entertainment
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Challenges in urban retail
1. Availability of space.
2. Competition among modern retail players.
3. Competition between traditional and modern
retailers.
4. High logistics costs.
5. Changing economic environment.
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Characteristics of rural market
1. 44 % of total villages have population of less than 500, 33% of total villages are connected by pucca roads.
(McKinsey survey 2007)
2. Heterogenous market
3. Lower literacy rate
4. Majority of consumers in lower income group.
5. Brand conscious consumers.
6. Influencers include NGOs, panchayat members, teachers,
doctors, primary health workers.
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Major players include
ITCs Choupal Sagar
Triveni groups Triveni Khushali Bazaar
Shriram groups Hariyali Kisaan Bazaar
IOCs Kisan Seva Kendras
Godrej Agroverts Aadhaar
HULs Project Shakti
Mahindra & Mahindras Shubh labh stores
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Challenges faced by retailers
1. Inadequate infrastructure (roads, railways)
2. Highly dispersed and thinly populated villages.
3. Inability to make large profits on products sold.
4. Supply chain problems
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Future Outlook
1. Organized retailers to focus on Tier II and Tier IIIcities.
2. Rural retail will continue to remain a challenge unless
developed.
3. Future retail growth dependent on economicsituation and government policy.
4. Technology to play an important role in modern
retailing.
5. Customer retention strategies to play an important
role in highly competitive markets .
6. Consolidation, mergers and acquisitions to play an
important role.
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