India Retail

Retail Story-India and some parts of the world By (gi)ULLU -I know (“gi” Stands for Global Indian)

Numbers….

• Retailing – World’s largest private industry • US$ 8.6 trillion sales annually

Numbers…..

Market In India •

ICICI Retail report 2002 says India market size is roughly US$ 286 bn – Just for comparison Wal-Mart does $260 billion in annual sales

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AT Kearney has estimated India’s total retail market at US$ 202.6 billion which is expected to grow at a compounded 30 per cent over the next five years. With the organized retail segment growing at the rate of 25-30 per cent per annum, revenues from the sector are expected to triple from the current US$ 7.7 billion to US$ 24 billion by 2010

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The share of modern retail is likely to grow from its current 2 per cent to 1520 percent over the next decade

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India Has 12 million retail outlets- one of the highest in the world (includes both organized as well as un- organized retail outlets) with 5 million selling food items.

What sells in India ? •

Food dominates the shopping basket in India for retail – USD 6.1 b Indian foods industry forms 44% of the FMCG basket – Most of it is un branded segment. Huge potential for growth in the branded segment (upto 60%)

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In organized Retail-Clothing Vertical is the largest contributor at 39% – Future Capital Holdings has invested $5 mn for a minority stake in Biba Apparels Pvt Ltd – Wolfensohn LLC has invested $11 mn in FabIndia for 6% stake – ADM Capital + Blackstone + New Vernon together have invested $25 mn in Brandhouse Retail for 10% stake – Fidelity + Gensis Capital + Artis Capital + Liberty International $33 mn in Provogue India

Evolution of Indian retail Historic/Rural Reach

Traditional/Perva sive Reach

Government Supported

PDS Outlets Khadi Stores Cooperatives

Weekly Markets Village Fairs Melas Source of Entertainmen t

Modern Formats/ International

Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls

Convenience Stores Mom and Pop/Kiranas

Neighborhood Stores/Convenie nce

Source : ICICI Presentation

Availability/ Low Costs / Distribution

Shopping Experience/Efficie ncy

Growth Factors • Huge young population and growing – Retail Purchasing Power of Indians - Over 70 mn Indians earn Rs 800,000 a year. This number is all set to rise to 140 mn by 2011

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Real GDP growth rate high and resilient Rapid urbanisation Broadening of the middle class Retail industry pundits invariably rank India as No. 2 to China on modern retail development potential. (A.T Kearney Retail Development Index) • International retailers congregating at the borders (Globalization)

International retailers in India: Strategies •Franchise • International company gives name and technology to local partner. Gets royalty in return. In case master franchise is appointed for region or country, he has right to appoint local franchisees • Nike, Pizza Hut, Tommy Hilfiger, Marks and Spencer, Mango •Manufacturing •Company sets up Indian arm for production • Bata India. It also has right to retail in India •Distribution •International company sets up local distribution office •Supply products to Indian retailers to sell •Also set up franchised outlets for brand •Swarovski, Hugo Boss Wholesale trading •Cash and Carry operations •100% FDI permitted • Metro Cash n Carry

http://www.nxtbook.com/nxtbooks/nrfe/stores-globalretail07/index.php

US Top Retailers

http://www.stores.org/pdf/07TOP100Chart.pdf

The GMBA Part-Doobye • Middle East value of retail sector is estimated at US$ 100 Billion • Dubai as a unanimous choice for retailers. Dubai's retailing sector makes up about 23% of the Gulf's $65bn retail industry • Dubai's retail industry could eventually contribute 30% of a $30bn per annum industry this total would be the equivalent of 10.25% of the GCC's current oil revenues

Start Counting them •

India’s largest mutli- brand retailers – Pantaloons (Future Group) – led by Kishore Biyani family; stake close to 44% • • • •

Plans to spend USD 1b Formats : Hyper marts, Super marts…all sorts Brands : Big Bazaar, Food Bazaar, e-zone, future Bazaar Plans to go into insurance, credit cards etc ; Future group holding company floated funds for the same • Pantaloon, believes that the consumer’s shopping basket will grow to include more non-food items

– Reliance Retail – the 100% subsidiary of Mukesh Ambani, Reliance Industries • • • •

Plans to spend USD 5b some say Brand: Reliance Fresh-neighborhood fresh-food outlets Citi group JV for credit card and financing options .Citi hold majority stake Format: planned hypermarkets, supermarkets, discount stores, department stores, convenience stores and specialty stores ; you name it boy!!!

Hyper Marts : 50000 sqft and more Super Marts :Anywhere between 15000 Sqft-20000 sqft

More •

RPG Group – First of the block in 1996 with a JV between Dairy Farm International (DFI), HK and set up Foodworld brand of stores – Other Brands : Music world, Spencer's, Daily, Health & Glow, Books and Beyond – Plans to ramp upto 50 Hyper markets by 2008

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Birla Retail – Plans to spend USD 2.5b

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Bharti & Wal-Mart JV Raheja’s – Shopper Stop

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Tata’s – Trent

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And many many more……

Porter for Pantaloons

Porter for Reliance

Pest for Retail

Government Regulations • The Government allows 100 per cent foreign direct investment (FDI) in cash and carry through the automatic route • 51 per cent in single brand stores only • The franchise route is available for big operators • Government also proposes further liberalization in the retail sector allowing 51 per cent FDI in consumer electronics, sports goods, stationery and building equipment

FDI in Retail