challenges of retal

7/30/2019 Challenges of retal

1/64

RETAILING IN INDIARETAILING IN INDIA

RETAILING

IN INDIA

Presentation byShahnas ASyama K S

Sobymol Devasia

Sabitha Z.B


2/64

RetailingRetailing

According to Philip Kotler retailing includes allthe activities involved in selling goods or Services

directly to final consumers for personal , Non

business use.

Every sale of Goods and Services to final

consumer Food products, apparel, movie

tickets; services from hair cutting to e-ticketing.


3/64

A retailer or retail store is any business enterprise

whose sale volume comes primarily fromretailing.

A retailer may be defined, as a dealer or traderwho sells goods in small quantities.

Any Organization Selling to final consumer

is retailing , whether they are

A Manufacturer

A Wholesaler

A Retailer


4/64

It does not matter how they sell or serve ( By)

Person Mail

Telephone

Vending Machine or Internet

Or

Where these are sold A store

A street

Consumers House


5/64

Retailing may be understood as the final step

in the distribution of merchandise, forconsumption by the end consumers.Retailers attempt to satisfy consumer needs by

having the right merchandise, at the right

price, at the right place, when the consumerwants it.Retailers are the final business in a

distribution channel that links manufacturers

to consumersIndian retail industry is the second largest

employer in the country with almost 12millionretail stores in India.


6/64

Characteristics of retailingCharacteristics of retailing

It offers direct interactionSale volume is comparatively large in quantities

Customer service

Sales promotions are offered at this point onlyDifferent forms

Location and layout are critical factors

More employment opportunities


7/64

Retailers TypesRetailers Types

Department stores

Specialty stores

Convenience store

Discount store

Off-price retailer

Super store


8/64

Functions of Retailing

Sorting

Breaking Bulk

Holding stock

Communications

Assist small suppliers

Customer service


9/64

INDIAN RETAIL-BRIEFINDIAN RETAIL-BRIEF

OVERVIEWOVERVIEWThe Indian retail sector is highly

fragmented with more than 90 percent of its business being carriedout by traditional family run smallstores.

This provides immense opportunityfor large scale retailers to set-up

their operations a slew oforganized retail formats likedepartmental stores, hypermarkets,supermarkets and specialty stores

are swiftly replacing the traditionalformats dramaticall alterin the


10/64

India is the third-most attractiveretail market for global retailersamong the 30 largest emerging

markets, according to US consultinggroup AT Kearneys report publishedin June 2010


11/64

RETAIL-MARKET SIZERETAIL-MARKET SIZE

The total retail sales in India willgrow from US$ 395.96 billion in2011 to US$ 785.12 billion by

2015Indian retail sector accounts for

22 per cent of the country's gross

domestic product (GDP) andcontributes to 8 per cent of thetotal employment.


12/64

Weekly MarketsVillage Fairs

Melas

Convenience StoresMom and Pop/Kiranas

PDS OutletsKhadi Stores

Cooperatives

Exclusive Brand OutletsHyper/Super MarketsDepartment Stores

Shopping Malls

Traditional/Pervasive Reach

GovernmentSupported

Historic/RuralReach

Modern Formats/International

Evolution of Indian retail

Source ofEntertainmen

t

NeighborhoodStores/Convenie

nce

Availability/Low Costs /Distribution

ShoppingExperience/Efficie

ncy


13/64

REASONS FOR THEREASONS FOR THE

GROWTHGROWTHRobust economic growthHigh disposable income with the end-

consumerRapid construction of organized retail

infrastructure are key factors behindthe forecast growth.Expansion in middle and upper class

consumer baseGrowth potential in Indias tier-II and

tier-III cities as well.The greater availability of personal

credit and a growing vehicle populationproviding improved mobility also

contribute to a trend towards annualretail sales growth of 12.2 per cent.


14/64

Indian Retail Buoyed byIndian Retail Buoyed by

high GDP growthhigh GDP growth8.90%

9.0%

6.8%6.0%

6.0%5.6%

5.2%

6.4%

6.6%

5.4%

9.2%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Projections of 8% sustainable real GDP growth ratetill 2020 promise high growth potential for Indian

Retail

RealGrowthRate

Source :Central Statistical Organization(CS0)


15/64

India Experiencing RapidIndia Experiencing Rapid

Economic GrowthEconomic Growth

9.4% growth rate makes India the second fastestgrowing economy in the world

GDP(US

$bn)

RealGrowt

hRate


16/64

Led by Growth in ServicesLed by Growth in Services

SectorSector

13% 14%

55%

21%

7%6%

21%

37%41%

107%

0%

20%

40%

60%

80%

100%

120%

Tourist Arrivals Passenger Cars

Sales

Commercial

Vehicle Sales

Domestic Air

Passengers

New Cell Phone

Connections

2005-06

2006-07

% Increase in growth over the previous year

Services sector adding to GDP in a significant manner


17/64

Driven from Consumption Throughout the 1.1Driven from Consumption Throughout the 1.1

Billion PopulationBillion 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 productse.g. bicycles , radios , textiles

Poverty Line = income less than $ 1/day

Source: McKinse ,

60 % of Indias population are under 24 years
http://images.google.com/imgres?imgurl=http://upload.wikimedia.org/wikipedia/en/thumb/2/23/Indian_Couple_on_Bicycle.jpg/180px-Indian_Couple_on_Bicycle.jpg&imgrefurl=http://en.wikipedia.org/wiki/Bicycle&h=250&w=180&sz=15&hl=en&start=1&tbnid=Vj2HXGk35I5f2M:&tbnh=111&tbnw=80&prev=/images?q=lower+class+indians&ndsp=20&svnum=10&hl=en&lr=&sa=N


18/64

With High PrivateWith High Private

ConsumptionConsumptionGDPUS$ 935 billion

Private Consumption

US$580 Billion(62%)

Public Spending and CapitalFormation

US$ 355Billion (38%)

RetailUS$ 342 Billion

(59%)

Non RetailUS$ 238 Billion

(41%)

Urban (5,100 towns)

US$ 154 Billion(45%)

Rural (6,27,000 villages)US$ 188 Billion

(55%)

Modern retail US$ 12 billion8% of urban retail spends

Modern retailNegligible

Food

Apparel

Beverages

Footwear

Consumerdurables

Appliances

Stationery

Kitchenutensils

Furniture

Furnishings

Sports goods

Health &Beauty

Personal Care

Jewellery

Timing

Transport

Communicati

on

Recreation

CulturalServices

Education

Rent

UtilitiesOther

Services

Source: Central Statistical Organization (CS0) and Technopak AnalysisConversion rate: 1 US$ = 40.86 Rs.


19/64

About US $530 Billion Retail Market byAbout US $530 Billion Retail Market by

20122012GDP*

US$ 1,450 billion

Private ConsumptionUS$ 870 Billion

(60%)

Public Spending and CapitalFormation

US$ 580 Billion (40%)

RetailUS$ 530 Billion(61%)

Non RetailUS$ 340 Billion(39%)

UrbanUS$ 252 Billion

(47.5%)

RuralUS$ 278 Billion

(52.5%)

Modern retail US$ 78 billion31% of urban retail spends

Modern retail US$ 9 billion3% of rural retail spends

Source: Technopak Analysisll figures are in nominal terms after taking into account inflation


20/64

May 7, 2013

Which Makes Indian Retail an AttractiveMarket

India tops the Global Retail Development Index


21/64

ORGANISED v/sORGANISED v/s

UNORGANISEDUNORGANISEDThe Indian retail market, over the

last decade, has been increasinglyleaning towards organized retailingformats.

The pattern in domestic retailing isaltering in the favor of organizedmodern retailing, a big change fromthe traditional plethora of

unorganized family-ownedbusinesses.Rapid urbanization, changes in

shopping pattern, demographicdividend and pro-active measuresby the Government are abetting the


22/64

Organised retail in India is expected to increasefrom 5 per cent of the total market in 2008 to

14 - 18 per cent of the total retail market andreach US$ 450 billion by 2015

According to a report titled 'India OrganisedRetail Market 2010', published by Knight FrankIndia, during 2010-12 around 55 million squarefeet (sq ft) of retail space will be ready inMumbai, national capital region (NCR),Bengaluru, Kolkata, Chennai, Hyderabad and

Pune. Besides, between 2010 and 2012, theorganised retail real estate stock will grow fromthe existing 41 million sq ft to 95 million sq ft.

Driven by the growth of organised retailcoupled with changing consumer habits, food

retail sector in India is set to be more than


23/64

Organized Retailing in India (2006)Organized Retailing in India (2006)

Organized retail INR 28,000 crore

Clothing, Textiles &Fashionaccessories

39%

Footwear 9%

Jewellery & Watches 7%

Mobile handsets & accessories 3%

Health & Beauty (including services) 2%

Food & Grocery 18%

Durables 13%

Books, Music & Gifts 3%

Home 3%


24/64


25/64


26/64

May 7, 2013

Modern Retail Organized Channels

The share of organized retail is less than 3% of the total retail market

The size of modern retail is about US$ 8 Billion and has grown by 35% CAGR in lastfive years

85% 81%

55%40% 36%

30% 20% 20% 3%

0%

20%

40%

60%

80%

100%

US Taiwan Malaysia Thailand Brazil Indonesia Poland China India

Traditional Channel Modern Channel


27/64

May 7, 2013

.. but Rapid Transformation is Anticipated

Current Size & Future Projections for Indian Retail Market

342 373408

445486

530

800

12 18 26 3959 87

200

0

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012 2017

US$

Billion

Total Retail Organized Retail

And may reach a share of 25% by 2017


28/64

May 7, 2013

RECENT TRENDS


29/64

May 7, 2013


30/64

May 7, 2013

Recent Trends

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

Store design : Biggest challenge for organizedretailing to create a customer-pull environment

that increases the amount of impulse shopping.Research shows that the chances of sensesdictating sales are upto 10-15%. Retail chainslike MusicWorld, Baristas, Piramyd and Globusare laying major emphasis & investing heavily instore design.

Emergence of discount stores: They areexpected to spearhead the organized retailingrevolution. Stores trying to emulate the model ofWal-Mart. Ex. Big Bazaar, Bombay Bazaar,RPGs.

Unorganized retailing is getting organized:To meet the challenges of organized retailingsuch as large Cineplex's, and malls, which arebacked by the corporate house such as 'Ansals'and 'PVR the unorganized sector is gettingorganized. 25 stores in Delhi under the bannerof Provision mart are joining hands to combinemonthly buying. Bombay Bazaar and Efoodmartformed which are aggregations of Kiranas.

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

Store design : Biggest challenge for organizedretailing to create a customer-pull environment

that increases the amount of impulse shopping.Research shows that the chances of sensesdictating sales are upto 10-15%. Retail chainslike MusicWorld, Baristas, Piramyd and Globusare laying major emphasis & investing heavily instore design.

Emergence of discount stores: They areexpected to spearhead the organized retailingrevolution. Stores trying to emulate the model ofWal-Mart. Ex. Big Bazaar, Bombay Bazaar,RPGs.

Unorganized retailing is getting organized:To meet the challenges of organized retailingsuch as large Cineplex's, and malls, which arebacked by the corporate house such as 'Ansals'and 'PVR the unorganized sector is gettingorganized. 25 stores in Delhi under the bannerof Provision mart are joining hands to combinemonthly buying. Bombay Bazaar and Efoodmartformed 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 retailoutlets 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 10-50villages 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 retailoutlets 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 10-50villages 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 plaguedthe retail industry:

Traditionally three factors have plaguedthe retail industry:


31/64

May 7, 2013

Retail Market not limited to metros but widely acrossIndia

The classic skimming strategy in the

metros is not longer sufficient 100 cities strategy

Over 250 large size shopping mallsare currently under construction

Leading cities 2030 areforecasted to be

Mumbai

New Delhi

Chandigarh

New Delhi

Bangalore

Mumbai

Chennai

Kolkata

Ahamabad

HyderabadPune

Above 10 Mn inhabitants




Kanpur

Lucknow

Jaipur

Nagpur

Coimbatore

Bhopal

Madurai

Kochin

Varanasi

Visakhapatnam

Patna

Indore

Surat

Vadodara

Ludhiana


32/64

AADHARAADHARFuture Group and Godrej Agrovet's joint

venture (JV) in rural retailing, 'Aadhar',is all set for a revamp. The allianceoperates stores in Gujarat,Maharashtra, Haryana and Punjab andmainly sells wheat and paddy apart

from daily need products. The companyalso provides farmers with solutions toproblems regarding their agriculturaloutput, which includes what kind of

crop can they plant and when, along-

RURAL RETAILING


33/64

Champion Agro LtdChampion Agro Ltd

Rajkot based Champion Agro Ltd isplanning to come up with singlewindow shopping facility forfarmers.

The company already has 35 agri-retailing outlets in the Saurashtraregion, and is expected to openaround 400 outlets at a taluka levelacross Gujarat by 2016.

It will open 50 new outlets by theend of 2011with an investment of

US$ 3.3 million. The overall


34/64

ACIL Cotton IndustriesACIL Cotton Industries

Vadodara based ACIL CottonIndustries is all set to come upwith around 40 outlets of 'ACIL

Krishi Store' in Gujarat. Of these,four outlets got operational inApril - May 2011. As for 2011,

ACIL has decided to focus on theGujarat market. ACIL stores willsell all types of seeds, fungicides,fertilisers, micronutrients.


35/64

OTHER VENTURESOTHER VENTURES

Marico is using mobiletechnology innovatively to armits field representatives in their

procurement process. The ITteam at Marico developed amobile-based application for

Nokia 5235 series handsets. Thecompany gave these GPS-enabled phones to 120 of its fieldrepresentatives, with mapped

routes.


36/64

Hindustan Unilever Ltd (HUL) isexperimenting with tablet PCs in its

attempt to increase its rural reach. Ithas been able to reach to 500,000outlets in a years time. According toNitin Paranjape, managing director,

HUL, We put all the villages on an ITmap. The name of the village, itstotal strength, nearest distributors

available, whether it has a school, ahospital, a primary health centre, allof this was mapped. We used thisinformation to determine the

opportunity the village presented to

Global Heavyweights in IndianGlobal Heavyweights in Indian


37/64

Global Heavyweights in IndianGlobal Heavyweights in Indian

RetailingRetailingJoint Ventures Product Range Retail FormatsBharti-Walmart (with $2.5

Billion investment byBharti)

Food & grocery, electronics & appliances, clothing &

footwear, furniture & furnishing, household articles.

Hypermarkets, Supermarkets and

Convenience

Carrefour-Landmark Food and groceries, FMCG, apparel and electronics Hypermarkets

Home Retail Group plc -Shopper's Stop Ltd andHypercity Retail India

Private Ltd

Franchising the Argos concept under the terms ofthe arrangement, Argos will be providing its brand,catalogue and multi-channel expertise and IT

support

Multi Channel propositions

Tata-Woolworths Sourcing agreement for Consumer durables andFoods under brand name CROMA

Multi brand retail chain

Staples Inc PantaloonRetail

Global Sourcing of Office equipments across variousbusinesses

Cash and carry

Reliance Food & grocery, electronics & appliances, clothing &footwear, furniture & furnishing, household articles.

Multi format and Multi Category

Birla Food & grocery, electronics & appliances, clothing &footwear, furniture & furnishing, household articles.

Convenience and Supermarket


38/64

FDI in RetailFDI in Retail

At present, the government allows51% foreign direct investment in asingle-brand retail venture while100% is permitted in wholesale

cash-and-carry.Under single-brand retailing a store

can stock goods that have the samebrand. In the wholesale cash-and-carry route, which most foreignretailers use, there is restriction onsale to individuals. These stores are

only permitted to sell to outfits suchas restaurants and kirana stores


39/64

FDI in RetailFDI in Retail

Foreign direct investment (FDI)inflows between April 2000 andDecember 2010, in single-brand

retail trading, stood at US$ 66.69million, according to theDepartment of Industrial Policy

and Promotion (DIPP).


40/64

FDI in Multi BrandFDI in Multi Brand

RetailingRetailingIndia's multi-brand retail sector,

is estimated to be worth $28billion (Rs 125,000 crore)

according to a Boston ConsultingGroup (BCG) study.

The government is likely to

permit foreign direct investment(FDI) in the multi-brand retailsector from April 2012.


41/64

The government prepared a draft inJuly 2011, which says 49 per centFDI in multi-brand retail will beallowed in a phased manner which

will be effective from the nextfinancial year i.e. April 2012.

The Committee of Secretaries (CoS)headed by Cabinet secretary AjitKumar Seth met on July 22 tofinalise the blueprint of the proposalfor political clearance. One of the

major outcome of the discussion israisin 49% to 51%.


42/64

According to the the economic advisorto the Prime Minister, Kaushik Basu ,the government will allow FDI in threephases. In the first phase, foreign multi-brand retail chains will be allowed in

the metros Delhi, Mumbai, Kolkata andChennai. In the second phase othermetros like Bangalore, Hyderabad andPune will be included.

The draft has laid out strict norms suchas earmarking 40 per cent investmentfor backend infrastructure, such as coldstorage, soil testing labs and seedfarming, for prospective entrants.


43/64

The move has paved the much-required way for internationalretailer like Bentonville, Arkansas-

based Wal-Mart Stores Inc. andParis-based Carrefour SA to opentheir retail stores through strategicpartnerships.

According to Business MonitorInternational, retail sales in Indiamay jump from $396 billion in 2011

to $785 billion in 2015, representing


44/64

to harm self-employmentopportunities

adversely affect the

manufacturing sectorharm small traders across the

country.


45/64

consumers will soon moreoptions to choose products

more and more investment in the

backendImprove the standard of

efficiency of supply chain

management.

f i di


46/64

Latest Information on IndianLatest Information on Indian

Retail ScenarioRetail ScenarioSingapore-based CapitaMalls

Asia, which develops, owns andmanages malls across Asia, has

pledged US$ 400 million to itsgrowth in India up till 2014. MrKevin Chee, CEO and Country

Head of CapitaMalls Asia, hassaid that apart from funding thetwo malls that are operationalnow, this money would be used

to develop seven more malls in


47/64

Reliance Retail will enter the cashand carry market with "RelianceMarket" in Ahmedabad; the first

one to be opened by August2011.


48/64

Ujala fabric whitener makerJyothy Laboratories has boughtHenkel AG's 50. 97 per cent stakein its Indian subsidiary for US$137.02 million, including debtand preference shares, the twocompanies revealed. The deal

includes Henkel's entire portfoliothat includes Henko and Chekdetergents, Pril dish cleaners andFa deodorant, and rights to the

multinational's future launches.


49/64

With the launch of its first 'ArvindExperience Store' in Gujarat atVadodara, denim major Arvind

Ltd. is looking at 100 stores bythe end of the financial year2011-12. The store in Vadodara isthe company's eighth in thecountry after seven stores inAndhra Pradesh.


50/64

Quick food service restaurantchain Subway will set up 45outlets across the country by

2011-12 entailing an investmentof around US$ 9 million. Thecompany has now 205 outlets inIndia and plans to take its countto 250 by the end of 2011-12.


51/64

Max Hypermarkets, the foodretailing chain of the Dubai-basedLandmark Group is investing US$

122.14 million for its storeexpansion business across 30cities in India.

R t il G tR t il G t


52/64

Retail - GovernmentRetail - Government

InitiativesInitiativesIndia will announce new rules for

foreign investment in retail by April2012, paving the way for companiessuch as Wal-Mart Stores and Carrefour

to open stores, according to JuniorTrade Minister Jyotiraditya Scindia. Agovernment panel has issued a reportthat recommends easing a law thatprohibits non-Indian companies from

operating multi-brand outlets. Allowingforeign investment in multi-brand retailmay help moderate food prices, saidKaushik Basu, chief economic adviser in

the finance ministry, who sits on the


53/64

India currently allows 51 per cent FDI in single-brand retail and 100 per cent in wholesale cash-and-carry operations.

In a landmark decision, the government haseased norms for investments by foreigncompanies that are present in India through a

joint venture (JV) or a technical collaboration.Now, the foreign company will not have to seek ano-objection certificate (NOC) from the Indianpartner for investing in the sector where the jointventure operates.

The government has also relaxed norms fordownstream investments and convertibleinstruments, giving foreign companies morepowers. The changes are part of the thirdrevision of the Consolidated FDI Policy.


54/64

KEY CHALLENGESKEY CHALLENGES

THE KIRANATHE KIRANA


55/64

THE KIRANATHE KIRANA

CRM practice Known about the customersfamilies

Credit and home delivery

Consumer familiarity runs fromgeneration to generation Open longer hours and stock most

of the goods Consequently, a large number of

customers are not willing to pay apremium for the shoppingexperience promised by largeformat retailers.

HIGH COSTS FOR THEHIGH COSTS FOR THE


56/64

HIGH COSTS FOR THEHIGH COSTS FOR THE

ORGANIZED SECTORORGANIZED SECTOR

High expenses to organizedsector .

The lease cost up to 6-10 percentof sales

Manpower cost is lower at 5-6

percent of salesCapital costs are more in retail

business due to major

renovations needed every 5-7

Organizing Retail in India-Challenges


57/64

RetailChallenges

Organizing Retail in India Challenges

Heterogeneous market

Product offerings in different stores across the country

will be very different

No standard mode of operation across formats

Market not mature (has to be validated)

Infrastructure will bring about logistical challenges

Though, improvements in road networks, power supply

are underway

Trained employees with understanding of retail

business are inadequate compared to the needs of

organized retail

Barriers to Entry

High taxes, bureaucratic clearance process and labourlaws

High cost of real estate

though over 600 malls are to come up all over the

country by the next 4 years

Indian retailers are deeply entrenched, are

expanding and building on logistics and technology


58/64

ProcessesProcesses

Complex Processes - Multiple MRP, Deals & Promotions, Forecasting &Replenishment, Lean supply chain JIT inventory, flow throughwarehouse

Evolving processes in Supply chain & merchandising

Global Best Practices not adopted

ConsumerConsumer

Infrastructure

Infrastructure

High disposable income

Changing consumer preferences

28 states, 100+ religion, 250+ festivals

Supply chain not reliable. Cold storage infrastructure evolvingOutsourced transportation

Low level automation in warehouses

Supplier/

Vendor

Supplier/Vendor

Current ITCurrent IT

Little or no collaboration between vendor & retailer

Low fill rates from vendors

Highly localized assortments leading to relationship with multiplevendors

Complex trading contracts and off invoice discountsMultiplicity of disparate Systems & Data Formats

No architecture roadmap

Base ERP and home grown POS solutions. Low investments in storesystems

No investments in planning & optimization technologies


59/64

Challenges contd..Challenges contd..Weakness of Player Retail not being recognized as an industry in india. The lack of recognition as an industry hampers the

availability of finance to the existing and new players. Thisaffects growth and expansion plans

The high cost of real estate:

Real estate price in some cities in India are amongst thehighest in the

world. The lease or rent of the property is one of the major areas

of

expenditure, high lease rentals eat into the profitabilityof a project.

Lack of adequate infrastructure Poor roads , lack of a cold chain infrastructure, etc ,

hamper the

development of food and fresh grocery retail in india. The existing supermarkets and food retailers have to invest

a substantial amout of money and time in building a coldchain network.


60/64

Multiple and complex taxation system The sales tax rates very from state to state while

organised players have to face a multiple point

control and tax system,there is considerable expenseto transfer good from one store to another.

Foreign direct investment:- The fact that foreign direct investment(FDI)is not

permitted in pure retailing is seen as one of theprime reasons for the slow growth of

retail in India. A global retailer can enter India only by way of a

franchise with an Indian partner or throughtechnological alliances.

Purchasing power of money

As the Indian population mostly consist of middleclass families and

low wages worker they don't want to go in the supermarket or retail market

The Way AheadThe Way Ahead


61/64

The Way AheadThe Way Ahead

India is amongst the least saturated of allmajor global markets in terms of penetrationof modern retailing formats

Many strong regional and national playersemerging across formats and productcategories

Most of these players are now gearing up to

expand rapidly after having gone throughtheir respective learning curves

Real Estate Developers are also moving fastthrough the learning curve to providequalitative environment for the consumers

The Shopping Mall formats are fast evolving

Partnering among Brands, retailers,franchisees, investors and malls

Improved Infrastructure

In view of a compressedevolution cycle, retailers need to

simultaneously address issues of speed,

Execution and efficiency

Key ChallengesKey Challenges


62/64

Key ChallengesKey Challenges

KeyChallenges to

overcome

KeyChallenges to

overcome

Attracting & retaining qualifiedmanpower

Implementing SOPs & bestpractices

Focus on improving operationalefficiency

Cost control CRM & Service levels

InternalInternal

High real estate cost Anarchic laws

Shortage of qualified manpower Poor infrastructure Unorganized & poor supply chain

ExternalExternal

Key OpportunitiesKey Opportunities


63/64

Key Opportunitiesey Oppo u es

Supply Chain Investments

Setting up logistics and supply chain infrastructure

Import of know how and logistics techniques from developed retailcountries

IT Infrastructure

IT is the enabler behind communication, collaboration withsuppliers, and an efficient supply chain

Manpower

Potential tie-ups with universities and setting up dedicated retailinstitutes

Utilize experience of international retailers to train local talent

Large Rural market

RETAIL ROAD AHEADRETAIL ROAD AHEAD


64/64

RETAIL ROAD AHEADRETAIL ROAD AHEAD

There is a huge untappedopportunity in the retail sector, thushaving immense scope for newentrants, driving large investments

into the country.A good talent pool, huge markets

and availability of raw materials atcomparatively cheaper costs areexpected to make India lead one ofthe worlds best retail economies by2042.

challenges of retal

Documents