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Analysis of Retail sector
Submitted to: Submitted to:
Prof Ranjana patel Akash SoniKushal Shah
Manish Khandekar
Pankaj RaiSaurabh Jain
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What is Retailing
y Its a final connection in the marketing channel that
brings goods from manufacturer to consumers.
y Retailing is the combination of activities involved in
selling consumer goods and services directly toconsumers for their personal or household use
y It is vibrant part of our changing society and a major
source of employment
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INDIAN RETAIL MARKET
y Fifth largest retail destination globally.
y Most attractive emerging market for investment.
y 13-15% share in GDP (2009) and expected to touch
22% by the end 2010.
y Only 6% is organized retail market.
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Organized
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organized
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SWOT analysis ofretail sector
STRENGTH
yThe governments of states like Delhi and National Capital Region (NCR) are very upbeat aboutpermitting the use of land for commercial development thus increase
ythe availability of land for retail space.
yThe growth of sachet revolution emerges for reaching to the bottom of the pyramid.
yThe annual growth of departmental stores is estimated at 24%.
yT
he size ofI
ndian organized retail industry reached at Rs.1,30,000 crore in 2006
yA large young working population with median age of 24 years, nuclear families in urban areas,along with increasing working women population and emerging opportunities in the service sectorare going to be the key growth drivers of the organized retail sector in India.
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OPPORTUNITIES
y Rural retailing is still unexploited Indian market.
y It can become one of the largest industries in terms ofnumbers of employees and establishments.
y Indian retail industry has come forth as one of the mostdynamic and fast paced industry with several players enteringthe market.
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THREATS
y The unorganized sector has dominance over the organized sector inIndia because of low investment needs.
y Labour rules and regulation are also not followed in the organizedretails.
y T
he sector is unable to employ retail staff on contract basis.y Problem of car parking in urban areas is serious concern.
y Difficult to target all segments of society.
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Environment threat and opportunity profile
(ETOP)for a Retail industry in India :
ENVIRONMENTAL
SECTORS
NATURE OF IMPACT IMPACT OF EACH
SECTOR
ECONOMIC FAVOURABLE
The Indian consumers behavior
pattern has changed. Now the
Indian consumer gets more hefty
pay- packages, is younger, alarge number of women are
working, western influences,
and more disposable income
have opened a lot of
opportunities in Indian
organized retail sector.The
Indian consumer wants to shop,eat and get entertainment in one
place and is have given Indian
organized retail sector an
opportunity to grow.
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POLITICAL FAVOURABLE
The Indian government
in 2005 allowed foreign
direct investment (FDI)
in single brand retail to
51%. This have opened
up a lot of opportunitiesin India organized retail
sector. In fact 325
departmental stores, 300
new malls, and 1500
supermarkets are being
built which shows the
tremendous
opportunities in the
organized retail sector
in India.
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POLITICAL UNFAVOURABLE
The Indian government
have allowed 51%
foreign direct
investment (FDI) in theIndia retail sector to one
brand shops only. This
have made the entry of
global retail giants to
organized retail sector
in India difficult. This isa challenge being faced
by the Indian organized
retail sector.
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REGULATORY UNFAVOURABLE
The biggest challenge
facing the Indian
organized retail sector is
the lack of retail space.
With real estate prices
escalating due to
increase in demand from
the Indian organized
retail sector, it is posing
a challenge to itsgrowth. With Indian
retailers having to shell
out more for retail space
it is effecting there
overall profitability in
retail.
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MARKET FAVOURABLE
Growth of Retail
Companies in India is still
not yet in a matured stagewith great potentials
within this sector still to
be explored. The
organized retailing sector
in India is only 3% and is
expected to rise to 25-
30% by the year 2010. The
Growth of Retail
Companies in India is
most pronounced in the
metro cities of India,
however the smaller towns
are also not laggingbehind in this.
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TECHNOLOGICAL
FAVOURABLE
The availability of
supply chain
management, customerrelationship
management &
merchandising software
can help much while
performing activities
such as ordering &
tracking inventory
items, warehousing,
transportation &
customer profiling. IT is
a tool that has been used
by retailers ranging
from Amazon.com to
eBay to radically change
buying behavior across
the globe.
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SUPPLIER UNFAVOURABLE
The supplier
environment offers the
biggest constraint on
the growth of retailing
industry in India.
Reaching Indiasconsumers cost
effectively is a
distribution nightmare,
owing to the sheer
geographical size of the
country and the
presence of traditional,
fragmented distribution
& retailing networks &
erratic logistics.
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ETOPfor Wal-Mart :y 'Wal-Mart Stores, Inc. is the world's largest
retailer, with $256.3 billion in sales in the fiscalyear ending Jan. 31, 2004. The company
employs 1.6 million associates worldwidethrough more than 3,600 facilities in theUnited States and more than 1,570 units.
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Environment threat and opportunity
profile (ETOP)forWal-Mart :ENIRONMENTAL
SECTORS
NATURE OF IMPACT IMPACT OF EACH SECTOR
ECONOMIC FAVOURABLE
The Indian consumers behavior
pattern has changed. Now the Indian
consumer gets more hefty pay-
packages, is younger, a large numberof women are working, western
influences, and more disposable
income have opened a lot of
opportunities in Indian organized
retail sector.The Indian consumer
wants to shop, eat and getentertainment in one place and is
have given Wal-Mart an
opportunity to grow.
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POLITICAL UNFAVOURABLE
The Indian government
have allowed 51% foreign
direct investment (FDI) in
the India retail sector toone brand shops only. This
have made the entry of
global retail giants to
organized retail sector in
India difficult. This is achallenge being faced by
the Wal-Mart in Indian
retail sector. Being a global
retailer means that you are
exposed to political
problems in the countriesthat you operate in.
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MARKET UNFAVOURABLE
FAVOURABLE
Being number one means
that you are the target of
competition, locally and
globally. Cut-throat
competition from the 12
million mom-and-pop
stores. These are easily
accessible and provide
services like free home
delivery and goods at
credit.
To take over, merge with, orform strategic alliances
with other global retailers,
focusing on specific
markets such as Europe or
the Greater China Region
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REGULATORY
UNFAVOURABLE
The biggest challenge
facing Wal-Mart in India
is the lack of retail space.
With real estate prices
escalating due to increase
in demand from the
Indian organized retail
sector, it is posing a
challenge to its growth.
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SocialUNFAVOURABLE
Small retailers of manydeveloping countries do
not want the big retail
players like wall mart to
enter in their countries
To protect domestic
unorganized market
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Estimates and predictions for retail sector:
y At present, the industry is estimated to be at more than
US$ 400 billion by a study of McKinsey.
y The Economist Intelligence Unit (EIU) estimates the
retail market in India will increase to US$608.9 billion in
2009 from US$394 billion in 2005.
y KPMG Report says that the organized retail would grow
at a higher rate than the GDP in the next five years.
y The retail sector would generate employment for more
than 2.5 million people by the year 2010, predicts ananalysis by Ma Foi Management Consultants Ltd.
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Strengths:
y Highbrand equity enjoyed by Big Bazaar
y State of the art infrastructure
y
A vast variety of stuff available under one roofy Everyday low prices, which attract customers
y Maximum percent of footfalls converted in sales
y Huge investment capacity
y Biggest value retail chain in India
y It offers a family shopping experience, where entire family can visit together.
y Available facilities such as online booking and delivery of goods
Weakness:
y Unable to meet store opening targets on time
y Falling revenue per sq ft
y General perception: Low price = Low quality
y Overcrowded during offersy Long lines at billing counters which are time consuming
y Limited only to value offering low price products. A no of branded products arestill missing from Big Bazaars line of products. E.g. Jockey, Van heusen,
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Opportunity:
y A lot of scope in Indian organized retail as it stands at approximately
4%.
y Increasing mall culture in India.
y More people these days prefer to visit big stores where they can find
large variety under one roof
Threats:y Competition from other value retail chains such as Shoprite, Reliance
(Fresh and trends), Hypercity and D mart.
y Unorganized retail also appears to be a threat to Big Bazaars business. A
large population still prefers to visit local convenient stores for daily
purchases
y Changing Government policies
y International players looking to foray India
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y Some of the players present in the industry:
Archies, Bata India Ltd, Big Bazaar, Crossword, Ebony
Retail Holdings Ltd., Fabmall, Food Bazaar, GlobusStores Pvt. Ltd.,Health and Glow, Liberty Shoes Ltd.,
MTR Foods Ltd., Music World Entertainment Ltd.,
Pantaloon Retail India Ltd., Shoppers Stop, Style SPA
Furniture Ltd, Subhiksha,Titan Industries, Lifestyle, etc.
y New entrants entering the market soon will be:
Reliance Retail Ltd, Wal-Mart Stores, Carrefour,Tesco,
Boots Group, etc.
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BIGBAZAAR
y Big Bazaar is a chain ofhypermarkets in India, with more
than 134 stores in operation. It is a subsidiary ofFuture
Group Limited, and follows the business model ofUnited
States-basedWal-Mart.
y The worldwide country chain, Big Bazaar, is formed by CEO
ofFuture Group, Mr. Kishore Biyani.The group do not
promises more than what it delivers.Their basic attraction
associated with reasonable prices is their Unique Selling
Price.
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Socio Economic FAVOURABLE
A lot of scope in Indian
organized retail as it stands
at approximately 5%.
family shopping experience,where entire family can visit
together.
More people these days
prefer to visit big stores
where they can find large
variety of quality andcheaper products under one
roof
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Culture FAVOURABLE
increasing mall culture
in India.
T
echnologyAvailable facilities such
as online booking and
delivery of goods
Facility of Plastic
Money
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Competitors UNFAVOURABLE
competition from other
value retail chains such
as Shoprite, Reliance
(F
resh and trends),Hypercity and D mart.
International players looking
to foray India.
Unorganized retail also
appears to be a threat to
Big Bazaars business. A
large population still
prefers to visit local
convenient stores for
daily purchases
Biggest value retail chain inIndia
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Government
FAVOURABLE
UNFAVOURABLE
FDI is allowed for
single brand retailing in
India
FDI is allowed only for
single brand retailing in
India
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Supplier FAVOURABLE
maximum suppliers to Big
Bazaar are very big
players of their industries
so very less chances oflow supply of products.
+ can have advantage of
Co-operative marketing
with the suppliers
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CUSTOMER FAVOURABLE
Large crowd during
weekends due to which
customers have to wait a
long at POS, this maychange the perception of
consumer about the
timely services
Huge potential market as
only 5% of Retail sector iscaptured by Organized
retailers
Highbrand equity
enjoyed by Big Bazaar
(customer perception)
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Thank you