India Is Ranked First On The Global Retail Marketing Essay

Occurs at the terminal of the supply concatenation – goods procured from makers through jobbers and so sold to the terminal purchasers

May affect both B2B and B2C type

Type

Organized retailing

Unorganized retailing

Online retailing

INDIAN RETAIL SECTOR

India is ranked foremost on the Global Retail Development Index -2009, conducted by AT Kearney across 30 emerging economic systems.

India is besides graded 4th in the 2009 Retail Apparel Index.

India has besides been ranked foremost on the Global Consumer Confidence Index -January 2009, conducted by the Nielsen Company.

Fifth largest retail finish globally

Industry has been turning at a compound one-year growing rate ( CAGR ) of 28 per cent for the last five old ages.

Provides employment to 8 per cent of India ‘s working population.

Estimated to turn from US $ 385 billion in 2007-08 to US $ 405 billion by 2009-10 and to US $ 573 billion by 2012-13.

Ranked most attractive emerging market for investing in the retail sector ( AT Kearney ‘s 8th one-year Global Retail Development Index ( GRDI ) , in 2009

As per Indian Council for Research on International Economic Relations ( ICRIER ) , the retail sector is expected to lend to 22 per cent of India ‘s GDP by 2010. Soon this portion is at 12 %

Traditional/Unorganized retailing still constitutes about 95 % of the entire retail market ( 12 million little and average retail mercantile establishments )

However, organized retailing is turning at an aggressive gait

Several domestic and international participants are puting up base in the state and spread outing their concern to tap this turning section

But as of now, organized retailing is more or less restricted to the urban countries

Penetration of organized retail expected to increase to 7 % by 2012-13

Assorted verticals under the Indian retail sector and their gross part

Food and drinks

US $ 231,951 million ( 74.41 % of gross )

Clothing and fabrics

US $ 29,024 million ( 9.31 % of gross )

Consumer durable goodss

US $ 15,171 million ( 4.87 % of gross )

Jewellery and tickers

US $ 13,390 million ( 4.30 % of gross )

Home Decor

US $ 9,463 million ( 3.04 % of gross )

Beauty Care

US $ 6,854 million ( 2.20 % of gross )

Footwear

US $ 3,268 million ( 1.05 % of gross )

Books, Music, Gifts

US $ 2,610 million ( 0.84 % of gross )

Traditional retail tends to rule the nutrient, food market and allied merchandises sector – food market and basics tend to be sourced mostly from the kirana shops, handcart sellers etc.

Apparel and consumer lasting verticals – fastest-growing verticals

Turning telecom incursion in little towns and small towns – Mobile phones have become a major retail point with the add-on of 10 million to 12 million nomadic phone users every month

Home decor sector is witnessing rapid growing because of cut downing mean age of Indians purchasing places

ORGANIZED RETAIL

Largely restricted to urban parts

Consumer exposure to modern retailing formats such as promenades and standalone shops, etc. , for specific merchandise classs

Clothing/textiles/apparel section contribute 27 % of the organized retail market -revenues worth US $ 6 billion in 2007-08

Apparel is one of the fastest-growing verticals, with a high figure of domestic and foreign trade names

Footwear – highest organized retail incursion. Players such as Bata India Pvt Ltd and Liberty – broad distribution webs

INDIA – Advantage

High GDP growing ( 6.7 % in 2008-2009 )

This is in bend driving the tendency of Indian consumerism – peoples ‘ willingness to fling on assorted points

66 % population below 35 old ages of age and more than 60 % population in working age

India is place to 20 % of the planetary population below 20 old ages of age

Diverse demands of the Indian consumer – spectrum of chances – from rural retailing to luxury retailing

Steadily lifting size of rich and super-rich population

Top three major retail merchants ( Pantaloon Retail Limited, Shoppers Stop and Trent Ltd ) history for merely 9 per cent of the sum organised retail market in India – hence a big untapped potency

Existing participants turning to tier-II and tier-III metropoliss for opening retail constitutions and manpower sourcing.

Significant cost advantages – low-cost skilled resources and attractive rental rentals/real estate monetary values.

Major Players

Pantaloon Retail ( India ) Limited

Future Group venture

Started operations with Pantaloon Shoppe in 1994

Soon over 12 million sq foot of retail infinite spread over 1,000 shops across 71 metropoliss in India.

Grosss worth US $ 887 million in 2007-08 – 75 per cent addition over 2006-07

Net net income stood at US $ 29.75 million – 87 per cent hiking over the old twelvemonth.

Pioneer in discounted shop format ( Brand Factory ) and other advanced shop formats ( Hometown, Sports Bar, Health City etc )

USP of PRIL – double attack to tap both the ‘value ‘ section and the ‘lifestyle and luxury ‘ section

Large Bazaar and Fashion Station aimed at value retailing

Central and Pantaloons aimed at lifestyle section consumers

Retail turnover – US $ 1254 million and Operating income – US $ 94 million in 2007-08

Shopper ‘s Stop Ltd

Established in 1991

Soon expanded to more than 100 retail mercantile establishments spread across 1.82 million sq foot of built-up country

Spans the full spectrum of retailing verticals and formats.

Shopper ‘s Stop has a sum of 26 shops in 12 metropoliss.

Strategic partnerships with international retailing participants, such as

Mothercare Plc of Britain

Leisure and Allied Industries of Australia

Aggressive enlargement programs are in the grapevine

Timezone – a leisure and amusement format venture

Brio – java saloon located strategically at Crossword, the bookshops in Shopper ‘s Stop mercantile establishments.

Retail turnover – US $ 266 million and Operating income – US $ 5 million in 2007-08

TATA TRENT

Established in 1998

Retail sector activity – dress, books and music

Current shop formats – Hypermarkets and supermarkets

Principal fascia – Westside, Landmark, Star India Bazaar

Future plans – Infiniti Retail Ltd

Industry private label dresss

Grosss – US $ 124million in 2007-08

RPG ENTERPRISES

Established in 1996

Retail footage – above 1.1million square pess

Above 250 shops – 36 big format shops across 66 metropoliss

Retail sector activity – music, nutrient and food market, beauty merchandises

Current shop formats – Convenience shops, supermarkets, hypermarkets

Chief facia: Spencer ‘s, Music World ( Music World has tie ups with 350 affiliates across the state )

Landmark

Present in India since 1999

Retail sector activity – dress place decor and trappings

Current shop formats – Department shops and hypermarkets

Soon 15 Lifestyle shops and 8 place Centres

Future plans – spread outing into Mini tube and Tier 2 metropoliss

Principal Fascia – Lifestyle, Home Centre, Max Retail

MADURA GARMENTS

Established in 1998

Part of the Aditya Birla Nuvo Group

Soon 82 shops in India across 50 metropoliss and five international shops

Retail sector activity: Apparel

Joint venture with international trade name: Esprit

Current mercantile establishments: Planet Fashion -50 mercantile establishments, Trouser Town -nine mercantile establishments

Future programs: Diversify into the adult females ‘s wear section

Chief facia: Louis Philippe, Van Heusen, Allen Solly, SF Jeans, Peter England

GLOBUS

Established in 1998

Retail sector activity: Apparel

Current shop format: Standalone shops

Current mercantile establishments: 24

Future programs: To put up an extra 100 manner shops by 2012

Industry private labels under Globus and F21

Chief facia: Globus

VISHAL MEGAMART

Established in 1986

Retail country coverage of 2,990,146 sq foot

Current shop formats: Supermarkets

Popular trade names: Zero Degree and Fume

10 warehouses and a mill with 700 imported machines that have the capacity to maker 150,000 pieces a month

MORE

Established in 1986 as Trinethra

Taken over by Aditya Birla Nuvo Group in 2006- renamed MORE

Retail sector activity – Food and Grocery, Beauty merchandises

Current shop formats – Convenience shops, supermarkets, hypermarkets

Current mercantile establishments – 640

Future plans – Pharmacy, dress, footwear

Principal fascia – More

PROVOGUE

Established in 1997

Retail sector activity – dress and footwear

Current shop format – standalone shops

Presently 124 ain shops and 228 mercantile establishments in 64 metropoliss

Future plans – manage and develop promenades

Principal fascia – Provogue, Prozone and Promart

Bata

Present since 1931

Retail sector activity – Footwear and accoutrements

Current shop format – Standalone shops

Presently 1250 mercantile establishments across India

5 fabrication installations

Future program – Remodel 150 shops, unfastened 40 more

Principal fascia – Bata

ARCHIES

Present since 1979

Retail sector activity – Gifts and cards

Current shop formats – Standalone shops

Current mercantile establishments – 100 company owned shops and 450 franchise-run mercantile establishments

Future plans – another 100 company owned mercantile establishments by 2010

Principal Fascia – Archies, Stupid Cupid

Other names in the list of successful retail merchants:

Sai Service Station Limited

Competent Automobiles CompanyLtd.

United Breweries ( Holdings ) Ltd.

India Motors Parts and Accessories Ltd.

Phoenix Millss

Metro Shoes

Hira cars

SOME OTHER KEY PLAYER IN MAJOR VERTICALS

FOOD AND BEVERAGES

( SUBWAY, MCDONALDS, CAFE COFFEE DAY, BARISTA, ITC, RELIANCE FRESH, BARISTA )

Clothing AND TEXTILES

( LEE, MANGO, KAPPA, BIBA, PETER ENGLAND, PEPE JEANS, NALLI, EBONY, BENZER, LEECOOPER, FABINDIA )

JEWELLERY AND WATCHES

( GILI, TITAN, TANISHQ, KIAH, CARBON, TISSOT )

Footwear

( REEBOK, NIKE, ADIDAS, LIBERTY, PARAGON, WOODLAND, UMBRO )

HOME DECOR AND FURNISHINGS

( GODREJ, GAUTIER, NILKAMAL, BOMBAY DYEING, DURIAN, RAYMOND )

Electronics

( CROMA, LG, SAMSUNG, PHILIPS, VIDEOCON, ONIDA, WHIRLPOOL, GODREJ, BPL, NEXT )

BEAUTY CARE

( AMWAY, MAYBELLINE, REVLON, LAKME, LOREAL, HIMALAYA, BIOTIQUE )

BOOKS MUSIC AND GIFTS

( HALLMARK, PLANET M, MUSIC WORLD, CROSSWORD )

INTERNATIONAL RETAILERS

Fast spread outing their concern in India to tap the big consumer base.

Reebok – largest shop in the universe in Hyderabad

Tommy Hilfiger and Levi ‘s – over 20,000 sq foot of retail infinite and standalone shops across major tubes.

Fast-food giants – Pizza Hut, McDonald ‘s and Subway are spread outing at a rapid gait in emerging tier-II and tier-III metropoliss.

Policy AND REGULATORY FRAMEWORK

Foreign participants can come in the Indian retail sector through the undermentioned paths:

Strategic License Agreements:

Foreign participants enter into a licensing understanding with a domestic retail merchant or spouse with Indian booster owned companies

Franchisee path:

Used by many Foreign retail merchants who use the maestro franchise/regional franchise path to come in into India

( eg. Pizza Hut. Dominoes, Nike, Subway, Marks and Spencer, Tommy Hilfilger )

Cash and carry sweeping trading:

100 % FDI allowed in sweeping trading – requires edifice of a big distribution web.

( eg. Metro, Shoprite )

Manufacturing

A company can set up a fabrication unit in India along with some standalone retail mercantile establishments

( eg. Bata, UCB )

Distribution

A foreign participant can put up a distribution office in the state and supply merchandises to local retail merchants. Same path can be used for franchisee mercantile establishments

( eg. Hugo Boss, Mango )

Joint venture

International houses can come in into understandings with domestic participants to put up their base in India. Share of MNC ‘s must be at or below 49 %

( eg. McDonald, Rbk )

FDI RESTRICTIONS

100 % allowance under the automatic path of Cash and carry sweeping trading and export trading

FDI up to 51 % for retail trade in individual trade name merchandises ( along with anterior authorities blessing )

No FDI influx allowed for retailing of goods under multiple trade names ( even if producedby individual maker )

LIBERALIZATION OF INDIAN RETAIL SECTOR

Value added Tax ( VAT ) introduced and implemented across several industry verticals ( except some like fabrics )

Removes jobs associating to multiple revenue enhancement

Brings about uniformity of monetary values

Octroi abolished in many provinces to farther retail trade

Labor Torahs – working hours, compulsory closing of shop for one time a hebdomad etc are being modified to accommodate modern retail demands ( guaranting that there ‘s no inauspicious impact on employees )

Attempts towards a individual window clearance mechanism to cut down entry/establishment timelines, easing seasonably, hassle-free blessings

Move towards a graduated attack in land and rent reforms – betterment of existent estate regulative environment – easy entree of retail infinite for international investors

Move towards release of big piece of land of undeveloped land for retail development in Mumbai and NCR – benefits in signifier of entree to grosss from sale of land and revenue enhancement aggregation from retail development

Enterprises like SEZ ‘s, allocation of authorities controlled land etc.

KEY DRIVERS OF GROWTH

EVOLVING INDIAN CONSUMER

Redefining of lifestyle forms of Indian in-between category, western values, trade name consciousness

Shift in mindset – Salvaging to disbursement

Increased consumer exposure driven by mass media

Income

Higher disposable incomes owing to better avenues of employment like IT/ITes etc ( disposable income expected to lift at 8.5 % per annum boulder clay 2015 )

Urbanization

Urban population is projected to increase to 468 million ( 33.4 % of projected population ) by 2010-11

DEMOGRAPHIC AND ECONOMIC FACTORS

Addition in figure of immature employed and thinning of gender divide a important factor to the success of modern retail

EASY CREDIT

Addition in scope and volume of retail recognition and service offerings

Bank recognition to commercial sector stepped up by 15.5 % in 2009 as compared to 2008

More credence of fictile money at little and average retail mercantile establishments

More successful in metropoliss in the South and West of India. Reasons scope from differences in consumer purchasing behaviour to cost of existent estate and revenue enhancement Torahs.

Opportunity

Till now, the growing and the success of the Indian retail narrative has remained concentrated in tubes and other large metropoliss ( eg. Retail activity in Bangalore Hyderabad Chennai and Kolkata are together expected to lend US $ 27 billion to the sector in 2009-10 ) . Pune and Ahmedabad are two metropoliss that deserve a specific reference.

But easy the focal point is switching to little towns and small towns every bit good

Rural retailing is traveling to presume significance in the times to come

52 prima towns might emerge as retail hubs by 2011 with tier-iii towns deriving market potency to host hypermarkets

Recent MERGER-ACQUISITION ACTIVITIES IN INDUSTRY

Target Name

AMOUNT BID ( US $ 1000000s )

DEAL STAKE

ANNNOUNCEMENT DATE

Investors

BRAND CALCULUS FRANCHISING ( INDIA ) PVT. LTD.

3.3

MAY-2009

HELION VENTURES PVT LTD. ( INDIA )

HOME SOLUTIONS RETAIL INDIALTD

30.8

February 2009

ICICI VENTURE FUNDS MANAGEMENT COMPANY LTD ( INDIA )

KOTAK INVESTMENT ADVISORS LIMITED ( INDIA )

UNIVERCELL TELECOMMUNICATIONS INDIA PRIVATE LIMITED

21.5

October 2008

PEEPUL CAPITAL LLC ( INDIA )

CARNATION AUTO INDIA LIMITED

23.1

30.0

September 2008

IFCI VENTURE CAPITAL FUNDS LIMITED ( INDIA )

PREMJIINVEST ( INDIA )

SUBHIKSHA Trading SERVICES LIMITED

51.9

10.0

September 2008

PREMJIINVEST ( INDIA )

BLUE FOODS PRIVATE LIMTED

140.1

50.0

August 2008

FUTUREGROUP INDIA

INDIVISION INVESTMENT ADVISORS LTD.

V-MART RETAIL PRIVATE LIMITED

14

25.0

July 2008

TGS INVESTMENT AND TRADE PVT LTD

MAHINDRA FIRST CHOICE PVT. LTD

18.6

10.0

June 2008

PHI ADVISORS ( INDIA )

NAHAR RETAIL LTD ( COTTON COUNTY INDIA )

29.7

March 2008

SEQUOIA CAPITAL INDIA ( US )

FUTUREBAZAAR INDIA LTD

15.0

March 2008

KLEINER PERKINS CAUFIELD & A ; BYERS ( KPCB )

SHERPALO VENTURES ( US )

UNITED PIZZA RESTAURANT PRIVATE LIMITED

127.8

49.0

February 2008

KOTECHA CAPITAL SERVICES LTD

CONVERGEM COMMUNICATIONS INDIA LTD

35.7

50.0

January 2008

Future VENTURES INDIA LTD. ( INDIA )

FOOTMART RETAIL INDIA LTD

1.5

January 2008

Future VENTURES INDIA LTD. ( INDIA )

SPECIALITY RESTAURANTS PRIVATE LIMITED

23

20.0

January 2008

SAIF PARTNERS ( HONGKONG )

Walmart has already entered a 50:50 joint venture and franchise understanding with Bharti Retail Ltd and set up its first hard currency and carry mercantile establishment in Punjab.

Starbucks be aftering to come in India in a twosome of old ages

Carrefour set to finalize retail path to India every bit good

FIVE Forces Analysis

Competitive forces within industry:

Largely driven by dress and food/grocery retail merchants

There ‘s a great trade of competition between bing retail merchants

Brand name is of import

Supermarket/hypermarket types of retail shops more popular

Bargaining strength of providers:

Suppliers in instance of the retail sector are largely either makers themselves or jobbers

Suppliers do hold a bargaining power in the relationship ; but retail merchants, since they interact with clients straight, have a strong say over affairs

Bargaining strength of purchasers:

For retail merchants, clients are the end-buyers of a product/service ( and in most instances the consumer as good )

Typically, high degree of competition within the sector allows clients some bargaining power

Customers can look around for the best available price/quality offer before doing a purchase determination

Menace of new entrants

New participants, particularly international retail merchants are competing for place in the Indian market

Case in point: Walmart, Carrefour

Amalgamations and Acquisitions are soon low in figure because of the planetary economic state of affairs, but with a recovery in sight, there ‘s traveling to be important action in the sector

Menace of Substitutes

At present, the chief menace of permutation is from the construct of E-retailing

Sites like E-bay can revolutionise the construct of retailing raw

Facilitates shopping without demand to step out

Besides, wholesalers/manufacturers sometimes sell to end-users straight for cost film editing and speedier procedure – Eg. Dell

Prognosis

Retail sector grosss are pegged to touch US $ 460.6 billion by 2010-11.

Organized retail is projected to turn to US $ 41 billion by 2012-13.

Modern retail is expected to accommodate and absorb from traditional formats.

Unorganized retail formats are meeting and uniting in formats such as mushrooming small town promenades.

Large Indian retail participants have already begun explicating schemes for the rural retail infinite.

International retail merchants like Walmart, Carrefour are viing to derive maximal bridgehead in emerging markets like India and China

The nutrient and drinks ( F & A ; B ) sector is expected to touch the US $ 116 billion grade by the terminal of 2008-09

Another chance that retail merchants worldwide ( including India ) are looking at is that of e-retailing ( E-bay heads the race of on-line retail merchants )

Some jobs that arise in this respect are – payment job, transportation job, confidence of offline presence, and some linguistic communication jobs