in retail sector report 2013
TRANSCRIPT
RetailSpecialists in retail service recruitment
www.michaelpage.co.in
THE INDIA RETAIL SECTOR
REPORT 2013
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RetailSpecialists in retail service recruitment
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Contents
Introduction
Talent Pool Availability
How Michael Page Can Help
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RetailSpecialists in retail service recruitment
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THE INDIA RETAIL SECTOR
Introduction
The Indian retail market is estimated to exceed US$ 750 billion by 2015, according to the India Retail Report 2013
(IRIS Research), presenting a strong potential for foreign retailers planning to enter India.
Until 2011, the Indian Central Government denied Foreign Direct Investment (FDI) in multi-brand retail, forbidding
foreign groups from any ownership in supermarkets, convenience stores or other retail outlets. Even single-brand
retail was limited to 51% ownership and a bureaucratic process. In late 2012, the Government of India passed a
Foreign Direct Investment policy which allows foreign retailers to own up to 51 per cent in multi-brand retail and
100% in single brand retail. It is expected that these stores will now have full access to over 200 million urban
consumers in India, approximately 47% of which are below the age of 30 with high levels of consumption.
According to A T Kearney’s Global Retail Development Index (GRDI) 2012, India is the 5th most favorable
destination for international retailers (Fig 1). Of the total Indian retail market, 8% constitutes the organised retail
segment which is estimated to grow at a rate of almost 30% by 2015, and hence at a much faster pace than the
overall retail market which is forecast to grow by 16% in the same period. Clothing & Apparel make up almost a
third of the organized retail segment, followed by Food & Grocery and Consumer Electronics. India currently has
a small penetration within the organized retail segment as compared to other emerging markets such as China,
which has a penetration of more than 20% within organised retail according to the Global Retail Index report by
the World Retail Conference.
Sources: Euromoney, Population Data Bureau, International Monetary Fund, World Bank, World Economoic Forum, Economist Intelligence Unit, Planet Retail: A.T. Kearney analyst.
Country 2012 Rank 2011 Rank Change
Brazil 1 1 0
Chile 2 2 0
China 3 6 +3
Uruguay 4 3 -1
India 5 4 -1
Georgia 6 Unranked N/A
United Arab Emirates 7 8 +1
Oman 8 Unranked N/A
Mongolia 9 Unranked N/A
Peru 10 7 -3
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The new FDI policy implies greater autonomy in functioning for foreign single-brand retail players who can now
own 100% of their Indian stores, up from the previous cap of 51% with only the stipulation that they will have to
source 30% of their goods from small and medium-sized Indian suppliers.
The new policy allows a maximum 51% ownership for the multi brand retail sector subject to the following
conditions:
• Each Indian state government has the option to accept or reject the implementation of this policy.
• Retailers can only set up in cities with a population of more than 1 million (total of 53 cities in India) provided
they have the approval from the respective state governments. The figure below shows state wise acceptance
of this new policy. Currently 18 cities are eligible for multi brand retailers to enter under this new policy.
• Multi-brand retailers must have a minimum investment of US$100 million with at least half of the amount
invested in back end infrastructure.
• They will have to source 30% of their goods from small and medium-sized Indian suppliers.
• E-commerce is not allowed as an alternate channel as it can serve the customer beyond the physical location
of the store.
INDICATIVE MAP OF STATES AND THEIR CONSENT STATUS
STATES IN FAVOUR1. Andhra Pradesh2. Assam3. Delhi4. Haryana5. Jammu&Kashmir6. Maharashtra7. Manipur8. Rajasthan9. Uttarakhand10. Daman & Diu and Dadra and Nagar Haveli
Share of Different Retail Verticals in Modern Retail
Beauty & Personal Care* 3%
Fitness 1%
Clothing & Apparel 33%
Fashion Accessories 1%
Footwear 4%
Jewellery 6%
Eyewear 1%
Timewear 2%
Food & Grocery 2%
Food Service 7%
Home & Interior* 5%
Leisure 2%
Entertainment & Gaming 3%
Consumer Electronics 8%
Mobile & Telecom 11%
Pharmacy 2%
The modern retail is close to 8% of the total retail market. The pie-graph shows how each category of modern retail fares against total modern retail.
States against FDI
States undecided
States in favour of FDI
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RetailSpecialists in retail service recruitment
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Talent Pool AvailabilityThe introduction of the FDI in retail policy will impact the availability of talent. Many institutes have now introduced
specialised post graduate degrees in retail management; i.e approximately 6,000 qualified professionals with
expertise in the field of retail management are being trained every year. Until now, retailers have sponsored
courses in some of the top B-schools to attract talent at a junior level as shown in fig. 4 below, while hiring at a
mid to senior level has primarily been from competitors.
We believe that the current trends and the rapid growth of the market will create an acute shortage of talent at the
mid to senior level, creating high demand for candidates that are experienced in setting up large retail chains as
well as candidates with international exposure.
This increase in demand is likely to drive up salaries. The figure below illustrates the inflation rate in India over the
last 5 years;, consequently average annual increase in salary will be between 12-18% in the retail sector as a result
of skill shortages spurred by the entry of new foreign players. In addition, salary increases are likely to go up by
20-25%.
On a sectoral basis, demand is likely to be highest for candidates with experience within Clothing & Apparel
followed by the Food & Grocery sectors which constitute the highest part of the organised retail market as well as
the areas where foreign retailers are likely to enter the fastest.
Jun-
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Infl
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Current Three-month One-year
Name Of Retailer Institutes with Sponsored Retail Courses
Pantaloon L.N Welingkar
Kirloskar group KIAMS
RPG group RPG institute of retail management
Future group IGNOU
Birla group Bimtech
Garware group Garware institute of management
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RetailSpecialists in retail service recruitment
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How Michael Page Can HelpMichael Page India has over 75 specialist consultants working on mid to senior level roles in four
disciplines across offices in Mumbai and Delhi NCR. These disciplines include:
• Sales, Marketing & Retail
• Finance & Accounting
• Human Resources
• Financial Services
Michael Page’s Mumbai office recruits for clients based in South and Western India while our
Delhi NCR office recruits for clients based in North and Eastern India.
Our specialist approach allows us to have a strong understanding of each discipline in which
we operate and the companies and individuals within it. This enables us to facilitate the perfect
match between parties in the most targeted and reactive manner.
Our clients in India range from large multinationals and Indian conglomerates to small and medi-
um sized companies. We have assisted a number of organisations in their strategic hiring for their
entry into the India market. Our team of expert consultants can assist you in better understanding
how to navigate through the particularities of the Indian market and attract the best talent for your
organisation.
For more information, please contact:
Alf Harris
Regional Director
5th Floor, 2 North Avenue, Maker Maxity
Bandra-Kurla Complex, Bandra (E) Mumbai 400051
Ph: +91 22 4236 3300
Nilay Khandelwal
Director
10th Floor, Building 8C, DLF Phase-11
DLF Cyber City, Gurgaon, Haryana 122002
Ph: +91 124 452 5500