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I NDIAN R ETAIL S ECTOR

I NDIAN R ETAIL S ECTOR. Presented by : ARCHANA YADAV. CONTENTS. Indian Retail Sector- An Overview Evolution of Indian Retail Government Policies and FDI in Retail Sector Recent trends in the Industry Drivers of Growth Challenges Ahead Future of Indian Retail .

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I NDIAN R ETAIL S ECTOR

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  1. INDIAN RETAIL SECTOR Presented by : ARCHANA YADAV

  2. CONTENTS • Indian Retail Sector- An Overview • Evolution of Indian Retail • Government Policies and FDI in Retail Sector • Recent trends in the Industry • Drivers of Growth • Challenges Ahead • Future of Indian Retail

  3. INDIAN RETAIL SECTOR- AN OVERVIEW • Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP.  • TheIndian Retail market is estimated to be US$ 500 billion and one of the top five retail markets in the world by economic value. • India is one of the fastest growing retail markets in the world, with 1.2 billion people. • India is the fifth most favorable destination for international retailers

  4. Indian Retail Sector is divided in two types: • 1.Organised Sector: It includes retailers who operate their business as a professionally managed commercial entity. They have professionally managers running the business, and maintain proper account books as per standards. • 2. Unorganised Sector: Unorganised retailing refers to the traditional formats of low-cost retailing. Unorganised retailing refers to retail businesses that are typically run by the owner (or his family) or a caretaker. The management of such retail stores is not a professional function and they lack technical and accounting standardisation

  5. Projected share of organised retail versus unorganised retail during the decade between 2010-11 to 2020-21.

  6. CLASSIFICATION OF RETAIL UNITS:

  7. a.) STORE BASED RETAILING: ON THE BASIS OF OWNERSHIP: 1. Sole proprietorship: In this type, the business is owned and run by an individual. He enjoys the whole profit and assets and also is responsible for liability & losses. 2. Partnership: In India, this is a general form of doing a business. When a single business carried out by two or more people, the form of ownership is called ’partnership’. 3. Joint venture: When two or more firms come together to accomplish a same goal or project for a limited period, it is termed as ‘Joint Venture’. Both companies are mutually benefitted and dependent on each other to achieve a common goal. 4. Limited Liability Company (LLC): The Limited Liability Company (LLC), a hybrid of the partnership and the corporation, has become a popular legal alternative for business owners.

  8. b.) BASED ON THE VARIETY OF MERCHANDISE MIX 1. Convenience stores: Stores which sells convenient goods in a limited variety, i.e. frequently purchased goods with minimum effort & easily accessible to customers is called convenience stores. 2. Supermarkets: A supermarket is a self-service store which deals with a wide range of food and non-food items. It offers fixed prices, clean products and faster check-out. 3. Discount stores: Discount store offers an extensive range of products with heavy discount in price than any format of retailer. 4. Specialty stores: Stores which specialises in a particular range of products and provides the depth and width of a specific product category is referred to as a specialty store. 5. Department stores: These are large stores which classifies products under specified departments. It has a wide range of products compared to any other formats. Department stores sell products such as furniture, apparel, appliances, electronic goods etc. 6. Hypermarkets: A hypermarket is a very large retail unit offering merchandise at low prices. Hypermarkets are characterised by large store size, low operating costs and margins, low prices and comprehensive range of merchandise.

  9. 3. BASED ON OPERATIONAL STRUCTURE: Independent retail unit: An independent retailer owns a single retail unit with a targeted customer base. 2. Retail chain: As the name indicates, chain indicates the number of retail units. Retail chain operates under a common ownership with several outlets. It ranges from two to thousands of stores across various locations and it maintains the uniqueness in ambience and in the variety of merchandise sold. 3. Franchising: Franchising is a business model in which a firm follows and runs its business by adapting the same strategies of a successful company under its brand name. 4. Leased department or shop-in-shop: When a brand owner occupies shelf space in another retailer’s store, which deals with multiple-brand, to increase their sales is called leased department ownership. 5. Co-operative outlets: In this concept of ownership, the retail outlets are owned by co-operative societies.

  10. 4. BASED ON RETAIL LOCATION Free-standing location: Free standing location represents an isolated location of the retailer where the business depends entirely on their pulling power. Here promotional tools are used to attract customers. 2. Business-associated location: One or more retailers work together and operate in a particular location to bring customers to their location where they compete with each other for the same kind of customers. 3. Retailers in specialised markets: Apart from business associated location, there are other locations in India which are specialised in specific types of products.

  11. GROWTH OF INDIAN RETAIL

  12. MAJOR INDIAN RETAILERS

  13. CORPORATE INITIATIVES IN RURAL RETAILING

  14. EVOLUTION OF INDIAN RETAIL

  15. 3. GOVERNMENT POLICIES AND FDI IN RETAIL SECTOR • Background • India has liberalized its single brand retail industry to permit 100% foreign investment, with regulatory issues and legal structures pertinent to establish operations in this new dynamic market. • As part of the economic liberalization process set in place by the Industrial Policy of 1991, the Indian government has opened the retail sector to FDI slowly through a series of steps: • 1995 – World Trade Organization’s general agreement on trade in services, which include both wholesale and retailing services, came into effect • 1997 – FDI in cash and carry (wholesale) with 100% rights allowed under the government approval route • 2006 – FDI in cash and carry (wholesale) brought under the automatic route • Up-to 51% investment in a single- brand retail outlet permitted • 2011 – 100% FDI in single –brand retail permitted • 2013 - India further eased foreign investment rules on 1st August 2013 in a renewed attempt to attract global supermarket chains. Foreign retailers have been keen to enter India's $500 billion retail market since the country allowed overseas investment in its supermarket sector in September 2012 but ambiguity around entry rules has kept them away.

  16. BENEFITS OF FDI IN RETAIL

  17. RECENT TRENDS IN THE INDUSTRY

  18. E- TAILING Electronic retailing, also known as e-tailing, deals with selling products and services online via the Worldwide Web. Internet retailing or ‘e-tailing’, as it is usually referred to, covers retailing using a variety of different technologies or media. E-tailing is becoming popular day by day. Internet retailing can be classified into three main categories: 1.Pure-Play E-Tailers:This type of retailer uses Internet as his primary means of retailing, e.g. E-bay.com, Amazon.com, futurebazar.com etc. 2.Bricks & Click E-Tailers:This type of retailer uses the internet to push his goods or services but also has the physical storefront available to customers, e.g. Pantaloon Retail India Ltd. 3.Click & Mortar:Click & Mortar describes a store that exists online and in the physical world, e.g. Bigbazar, Hypercity, etc.

  19. DRIVERS OF GROWTH • Young working population • Economic Growth • Untapped potential market • Low cost of operations • Share of Wallet • Increase in sizeable and disposable income • Diversified culture and festivals • Growing Number of High Net worth Individuals (HNI) • Brand consciousness • Media exposure

  20. CHALLENGES AHEAD • Lack of Infrastructure • High Rentals • Supply chain and Logistics issue • What to sell • Inconsiderable regulatory framework • Limited FDI • Fraud in retail is expensive • Government Interference

  21. FUTURE OF INDIAN RETAIL • The Indian retail industry is expected to reach US$ 1.3 trillion by 2020 (IBEF, 2012). The promising sectors that are likely to grow in near future include fashion and lifestyle, food and grocery, and electronics. • The retailers will have to shift their focus from selling a product to delivering an individualized store experience. Growth would be achieved by expansion (increasing the market size) and diversification (increasing the firm’s offerings) strategies. • Environmental concerns and corporate social responsibility will occupy a significant place in the retailers’ decisions and the rural consumers would have a better control on the market. • McKinsey report 'The rise of Indian Consumer Market', estimates that the Indian consumer market is likely to grow four times by 2025. • Retail industry in India is expected to rise 25% yearly being driven by strong income growth, changing lifestyles, and favorable demographic patterns.

  22. Indian retail industry is one of the fastest growing industries with revenue is increasing at a rate of 5% yearly. • India's overall retail sector is expected to rise to US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10 per cent . • A further increase of 7–8% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural consumption. • Unorganized retail is expected to grow at 5% and reach a size of US$ 650 billion (76%), while organized retail is expected to grow at 25% and reach a size of US$ 200 billion by 2020 as per the sector profile by Federation of Indian Chambers of Commerce and Industry (FICCI) • The organized retail segment in India is projected to be 9% of total retail market by 2015 and 20% by 2020.

  23. YEARLY REAL GDP GROWTH RATES India has registered a healthy real GDP growth of over 7% p.a. between 2007 and 2012. It is the second-fastest growing economy among the BRIC nations, after China, and it is expected to continue this growth trajectory over the next five years

  24. FORECAST NORMAL GDP OF NATIONS India is among the top 10 economies (by GDP) in the world, and it is poised to become the 3rd largest by 2030. In PPP terms, India came in at third spot in 2012, after the US and China.

  25. A McKinsey study claims retail productivity in India is very low compared to international peer measures.

  26. India’s retail market is likely to touch a whopping Rs. 47 lakh crore by 2016-17, expanding at a compounded annual growth rate of 15 per cent, a Yes Bank-Assocham study says. • According to the study, organised retail, which comprised a measure seven per cent of overall retail market in 2011-12 is estimated to grow at a CAGR of 24 per cent and attain 10.2 per cent share of total retail by 2016-17. On the supply side, retail sector growth will be backed by expansion plans of existing players and the entry of new players, the study said. • It also listed out the challenges being faced by the country’s retail sector such as dearth of skilled manpower, numerous clearances required to set up a retail outlet and lack of basic infrastructure like roads, power and water. Store-based retailing is likely to witness a CAGR of 7.6 per cent during 2011-16 and will grow by 44 per cent in absolute terms during this period, the study highlighted. • Amid traditional grocery retailers, kirana stores will continue to be the largest contributor to value share by 2016 and are likely to account for 61 per cent share in constant value sales, it said. • (Source: The Hindu February 11, 2014)

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