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GROWTH IN CONSUMER CONSUMPTION
Consumption will grow 4x over 2005 – 2025. Urban India will account for more than two-thirds of this growth as urban household income will grow 3.3x over the same period.
Aggregate annual consumption(Bln, Indian rupees, 2000)
10
10,00020,00030,00040,00050,00060,00070,00080,000
All India consumption
2005
Rural consumption
growth
Urban consumption
growth
All Indiaconsumption
2025
18,896 16,695
35,913
71,504
Source: MGI India Consumer Demand Model, v1.0
10
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
1985 1995 2005E 2015F 2025F
65,41686,351
115,620
208,406
378,170
2.9%
6.1%
GROWTH IN CONSUMER CONSUMPTION
Consumption will grow 4x over 2005 – 2025. Urban India will account for more than two-thirds of this growth as urban household income will grow 3.3x over the same period.
Aggregate consumption per Urban Household(Indian rupees, 2000)
Source: MGI India Consumer Demand Model, v1.0
BangaloreHyderabad, Mumbai KolkataDelhiChennaiAhmadabadPune
SuratKanpurNagpurLucknowJaipurKochiVadodaraIndore
TiruchirapalliAmritsarFaridabadAurangabadAllahabad GwaliorJodhpurRaipurBhubaneswar
RohtakRurkelaUdaipurAnandFaizabadHassanShimlaRoorkeeShillong
* Population for each city estimated using the average urban household sizeSource: The Great Indian Middle Class, NCAER; MGI India Consumer Demand Model (v1.0); MGI analysis
LudhianaMaduraiBhopalPatnaNasik, AgraVaranasiRajkot
8 citiesPopulation > 4 million
Tier 1Major cities
26 citiesPopulation > 1 million
Tier 2Mainstream cities
33 citiesPopulation > 500,000
Tier 3Climbers
33 cities5,094 towns
Tier 4Large towns
URBAN CLASSIFICATION AND FOCUS OF ORGANIZED RETAIL
Urban areas are classified into four types depending on population. Traditionally, organized retail chains focus on tier 1, 2 and tier 3 (limited). There is a clear gap when it comes to Tier 4 cities.
Tier4Large towns
Tier3Climbers
Tier2Mainstream cities
Tier1Major cities
27
5
8(15%)
16(29%)
Tier4Large towns
Tier3Climbers
Tier2Mainstream cities
Tier1Major cities
114
136
129
186
Tier4Large towns
Tier3Climbers
Tier2Mainstream cities
Tier1Major cities
3,009 (39%)
670 (9%)
1,064 (14%)
3,034 (39%)
Note: Disposable Income estimated using income distribution of households from NCAER and model estimates of average household income; Figures are rounded to the nearest integer and may not add up to 100% Source: The Great Indian Middle Class, NCAER; MGI India Consumer Demand Model, v1.0; MGI analysis
40% of total disposable income is generated in Tier 4 cities
Total Households(million, (share))
Average income per household(1000, Indian Rupees)
Total disposable income(Bin, Indian Rupees (share))
POTENTIAL IN TIER 4 CITIES
This leaves a huge unmet demand in serving the needs of affluent customers in smaller towns.
SUMMARY OF OPPORTUNITY
Existing ‘mom-and-pop’ stores are not able to meet the demands of affluent customers in towns.
Organized retail chains are yet to penetrate these towns. Ecommerce is not yet a viable channel given that customers are not tech savvy,
psychological barriers and limited infrastructure.
The key focus of FabMart by MRPL is to address the needs of affluent customers in Tier 3 and 4 cities.
FABMART – TARGET SEGMENT
Focus of FabMart by MRPL
Deprived
Aspirers
Seekers
Strivers
Globals
Tier 1 Tier 2 Tier 3 Tier 4
• Product availability – A wide range of products and services should be available.
• Convenience – The process of shopping should be convenient and fun.
• Confidence – Customer should trust the seller and the brand.
• Operational control – A high quality of customer experience needs to be ensured with a tightly managed service delivery model.
• Lean & scalable model – Since volumes will be low in any given town, the model should be lean but highly scalable.
1
2
3
4
5
Key success factors to serve affluent customers in towns
FabMart by MRPL by MRPL
Organized retail
COMPETITIVE ANALYSIS
• The typical mom-and-pop store serving customers in the town
• Large format retail stores that are occasionally seen in some tier 3/4 towns
• E-commerce chains such as Flipkart, Myntra etc.
• Customers going to the nearest city to buy goods that are not normally available
Comments
Value proposition to the customer
Comparative Threat
Pros:• Convenience• Trust• Instant
gratification
Cons:• Limited variety• May not be
the best deals
Pros:• Variety and good deals
Cons:• Various links in the
value chain (from a small
town point of view) are not yet mature i.e. Technology, Logistics, Payments etc.,
• Trust deficit• Familiarity with online
shopping required• No touch-and-feel
experience
Pros:• All the benefits
of a typical LFR store
Cons:• Involves prior
planning and travel• Returns are not
possible if the city is located at a distance
• Low-Medium • Low • Low-Medium • High
Pros:• Convenience• Trust• Instant gratification• Variety and deals
Cons:• Is not present in most
of the target towns
Mom & Pop stores Large format retailE-commerce
Shopping from adjacent cities
In the target towns
ABOUT FABMART BY MRPL
FabMart by MRPL aims to simplify shopping for customers in smaller towns in India while offering them an unmatched online shopping experience. We are the only company in India that is exclusively focused on catering to customers in small towns by bringing in a wide range of products offered by a multitude of brands.
We want to combine our industry expertise, technology know how to offer our customer in towns two things: Fastest and best e-commerce experience, and Timely delivery in the towns.
The Team
Alphonse Reddy Founder & CEO, 12 years industry experience spanning sales, marketing, strategy and finance. BE (BITS, Pilani) and MBA (INSEAD Business School)
Investors/Advisory Team
Hemu Javeri Executive Director, Forum Synergies, a $150m PE fund. Previously CEO of Madura Garments, Nike and Home Solutions.
Anand Morzaria CEO of Pennywise Solutions. MSc Finance (BITS, Pilani)
Ashish Agarwal Investment Director, Navis Capital, a $3b PE fund. MBA (INSEAD Business School)