Post on 14-Apr-2018
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Global Retail
Presented By:
Pulkit Bohra (PGDM 2012-14)
(pulkit.bohra12@iimranchi.ac.in)
Conundrum The Consulting Club
IIM Ranchi
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Agenda
Introduction What is Retail?
Global Retail: Leading Players
Global Retail: Retail Statistics
Global Retail: Issues and Trends Retail in India: Changing Landscape
Online Retail in India
Challenges Ahead
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What is Retail?
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Defining Retail Industry
Global Retail
Industry comprises companies engaged in the sale of finished goods
Defined on the basis of revenues generated by companies operating in thissector
Classification on the basis of the kind of products sold
The food retail subsector
involves companies
engaged in the sale of food
and beverages for off-premise consumption
through various channels
Food products sold in this
subsector include meat
and poultry, bakery,
grocery, organic foods, and
prepared foods
Non-food retailing involves
the sale of products other
than food and beverages
through various retailchannels
Non-food retailing broadly
includes following:
Apparel and footwear
Electronics and
computers
Pharmaceuticals
The restaurants and food
service subsector involves
sale of all food and drink
(soft and alcoholic) in orthrough restaurants and
cafes, quick service
restaurants, catering and
drinking places
Food Retail Non-Food Retail Restaurants & Food Services
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Global Retail Industry on the Recovery Path
Global Retail Industry Size
Sales decline
during recession
Source: GCC Retail Industry, Alpen Capital, November 1, 2011
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Retail: Some Quick Facts
Sales of Top 250 retailers: US$3.94 Trillion
Average Size of Top 250 Retailers: US$15.76 Billion
Composite y-o-y Sales Growth: 5.3%
Composite Net Profit Margin: 3.8%
Composite Return on Assets: 5.8%
Composite Asset Turnover: 1.5 times
Top 250 Retailers, 2010
Source: Annual Reports, Deloitte
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Global Retail: Leading Players
# Retailers Country Sales (US$
Billion)
Dominant
Operational
Format
# of Countries
of Operation
CAGR
(05-10)
1 Wal-Mart US 418.95 HM, SC, SS 16 6.0%
2 Carrefour France 119.64 HM, SC, SS 33 3.9%
3 Tesco UK 92.17 HM, SC, SS 13 9.3%
4 Metro Germany 88.93 Cash & Carry 33 3.8%
5 Kroger US 82.19 Supermarket 1 6.3%
6 Schwarz Germany 79.12 Discount Store 26 9.8%
7 Costco US 76.26 Cash & Carry 9 8.0%
8 Home Depot US 67.99 Home
Improvement
5 -2.5%
9 Walgreen US 67.42 Pharmacy 2 9.8%10 Aldi Germany 67.11 Discount Store 18 5.9%
Source: Annual Reports, Deloitte
Notes: HM = Hyper market; SC = Super Center; SS = Super Store
Top 10* Sales: US$1.16 Billion
Top 250 Sales: US$3.94 Billion
Concentration of Top 10: 29.4%
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Food Retail: Carrefour
Source: Annual Reports
Carrefour SA, is a French company primarily engaged in retail distribution.
It operates through various retail formats, including cash-and-carry outlets,
convenience stores, discount stores, hypermarkets and supermarkets. It
also offers e-commerce services.
The company has more than 15,000 stores in35 countries worldwide. Its
stores are either company-operated or franchised.
It employs approximately 476,000 people globally.
The companys auditor is KPMG
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Food Retail : Tesco
Source: Annual Reports
Tesco Plc is an international retailer based in the UK. It entered the US
market in 2008.
The company operates through two business segments Financial services
(retail banking and insurance services) and Retailing.
The company has 4,331 stores worldwide, employing more than 470,000
people across 14 countries.
The companys auditor is PriceWaterhouseCoopers
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Food Retail : Metro
Source: Annual Reports
Metro AG is a German trade and retail company. It acts as a holding
company for the Metro Group, which is organized into four independent
sales divisions
Galeria Kaufhof (department store), Media Market and Saturn
(consumer electronics company), Metro Cash & Carry, and Real
(hypermarket operator).
The company is active in 2,127 locations in 33 countries, employing
251,650 people.
The companys auditor is KPMG
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Non-Food Retail : Wal-Mart
Source: Annual Reports
Wal-Mart Stores, Inc. operates retail stores in various formats around the
globe. It provides an assortment of merchandise and services to its
customers at low prices.
Wal-Marts operations comprise ofthree business segments Wal-Mart
US, Sam's Club and Wal-Mart International, with Wal-Mart US being the
largest of the three.
The company has more than 8,400 stores in 15 countries, serving more
than 200 million customers each week.
It employs approximately 2,100,000 people.
The companys auditor is Ernst & Young
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Non-Food Retail : CVS Caremark Corporation
Source: Annual Reports
CVS Caremark Corporation is one of the largest providers of prescriptions
and related healthcare services in the US through its 7,000 stores and its
CVS.com retail website.
The company comprises of two business segments Retail Segment and
Prescription Benefit Management.
The average number of prescriptions managed orfilled by the company in a
year is more than 1 billion. It employs approximately 211,000 people.
CVS Caremark Corporation drives value for its customers by managing their
pharmaceutical costs as well as improving healthcare results through its
stores.
The companys auditor is Ernst & Young
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Non-Food Retail : Costco Wholesale Corporation
Source: Annual Reports
Costco Wholesale Corporation operates an international chain of
membership warehouses, under the name of Costco Wholesale.
The warehouses are designed to help small to mid-size businesses reduce
costs in purchasing for resale or for everyday use.
Some of the product categories that the company offers include groceries,
candy, appliances, television and media, automotive supplies, tyres, and
toys.
Costco Wholesale Corporation is open only to members and offers three
types of memberships Business, Gold Star (individual) and Executive.
It employs approximately 79,000 people.
The companys auditor is KPMG
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Restaurant & Food Services : McDonalds
Source: Annual Reports
McDonalds Corporation franchises and operates more than 30,000
McDonalds restaurants, serving nearly 50 million people in more than 100
countries worldwide.
Independently-owned and operated distribution centers, approved by the
company, distribute products and supplies to most McDonalds
restaurants.
In 2009, of its 32,478 restaurants in 117 countries, 26,216 were operated
by franchisees and 6,262 by the company.
It employs approximately 385,000 people.
The companys auditor is Ernst & Young.
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Restaurant & Food Services : Compass Group Plc
Source: Annual Reports
Compass Group Plc is a UK food service provider, which operates in over 50
countries worldwide.
The company provides services to a wide range of consumers in hospitals,
schools, sporting or cultural events, workplaces and remote environments.
Its well-known brands include Catering to You and Outtakes.
It employs approximately 386,168 people.
The companys auditor is Deloitte & Touch
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Restaurant & Food Services : Yum! Brands
Source: Annual Reports
Yum! Brands, Inc. (Yum) is one of the largest restaurant companies, with
37,000 restaurants in more than 110 countries and approximately 1.4
million associates.
The company develops, operates, franchises and licenses a worldwide
system of restaurants that prepare, package and sell a range of food items.
The well-known restaurant brands of the company include KFC, Pizza Hut,
Taco Bell and Long John Silvers.
It employs approximately 49,000 people.
The companys auditor is KPMG
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Global Retail: Share of Top 250 sales, by Country
Source: Annual Reports, Deloitte
1.20%2.60%
6.50%
8.80%
11.60%
5.40%
1.80%9.50%
41.70%
11.10%Africa/ME
Canada
UK
Japan
Other EU
Other APAC
Latin America
France
US
Germany
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Global Retail: Sales by Product, 2010
Source: Annual Reports, Deloitte
8.00%
66.60%
15.60%
9.80%
Fasion
FMCG
Hardlines & Leisure
Diversified
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Retailers: Value Chain Analysis
Retailers
Procurement through third party vendors
Fully integrated retailer*
*A fully-integrated retailer is one which operates by itself, at each level of the value chain
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Value Chain Analysis Retailers (Food / Non-food) Procuring from
Third-Party Vendors
Procurementof products
Transportationand Distribution
Display, Sales &Marketing
Feedback
Source: KPMG
Manufacturers Distributors Retailers
Feedback
Display, Sales &
Marketing
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Value Chain Analysis Fully Integrated Retailers
Transportation and
Distribution
Display, Sales &
MarketingFeedback
Processing and
PackagingFarming and
procurement
Source: KPMG
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Trends in Global Retail Industry
Source: Deloitte
Trend Description
Globalization is not a new theme any more
Retailers continue to look to enter new markets
in Asia, Africa and South America
Retailers have learnt to deal with barriers in
emerging markets. They are customizing their
business model as well as product offerings to
meet local needs & preferences.
Retailers will not only be looking for growth in
emerging markets; they will also look to
innovate in multi-channel strategies, mobile
and data analytics to maintain or grow their
market shares in developed markets.
Growth in Emerging Markets
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Trends in Global Retail Industry
Source: Deloitte
0 5 10 15 20
N America
Africa
Mid-East
Cent America
Oceania
Southeast Asia
E Asia
E Europe
Cent Europe
W Europe
7
10
3
2
3
1
3
8
5
2
3
2
1
3
2
4
9
11
2
6
5
1
1
1
Franchising/Licensing Organic Growth Acquisition JV
In 2010, 40 retailers began operations in new country, with a combined total of 88 new market entries
Market expansion by Top 250 retailers, 2010
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Trends in Global Retail Industry
Source: Deloitte
Trend Description
Retailers are entering new markets through
various channels
Retailers to focus on multi-channel strategy
As consumers become more tech-savvy,
retailers will focus on seam less integration
across retail channels
They will have their presence in internet based-
as well as physical retailing
Some retailers are using online medium to test
grounds in new geographies before physical
expansion
Multi-Channel Retailing
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Other Global Trends/Issues
Mergers and acquisitions picking up
Growth of private labels
Emphasis on cost management
Shift in consumer demand
Organic Foods, Eat at Home
Retailers pushing pressure on suppliers for discounts
Shrinkage and loss prevention
Customer-centric merchandising practices
Sustainability and Environment
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Retail in India
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Bright Future Prospects
One of the top 5 retail markets of the world
Accounts for 22 %of Indias GDP
Market estimated to reach US$650 billion by 2015
Organized retail penetration to cross 10% in next 5 years
Source: Indian retail: Short-term blips but long term prospects bright, CRISIL Research, May 2012
Overall retail growth in India Organized retail growth in India
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Changing Landscape of Retail in India: Post FDI
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Changing Landscape of Retail in India: Post FDI
Source: Economic Times
At least 10 states in India are opposing FDI in Retail
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Saga of Online Retail in India
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Both external and internal drivers are likely to propel online retail
growth in the coming years
Rising per capita disposable income
Growing employment and opportunities
Increasing percentage of households with at
least one computer
Growth in broadband penetration
Improving incomes and greater internet
access will likely benefit the online retail sector
Consumers greater comfort to purchase online
Improved online presence of retail categories
Broader web shopping capabilities (mobile and
tablet devices)
Innovative new shopping models (increased
personalization, greater integration of social
media tools in the online shopping experience,
improved back-end logistics, flash sites,
subscription models, shopping walls etc.) Online loyalty programs
Aggressive promotional offers from online
retailers (daily deal sites)
Technology, innovation, and increasing comfort to shop
online will drive online retail spending
ExternalDrivers
InternalDrivers
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50
44
19
14
36
26
33
16
20
23
2
1
19
30
8
5
6
19
18
5
6
2
17
6
19
11
14
10
12
10
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
India
China
US
UK
Brazil
Social Digital Shoppers Digital Shopaholics Rational Online Shoppers
Value Seekers Occasional Online Shoppers Techno-Shy Shoppers
Source: Digital Shopper Relevancy, Capgemini, 2012
Indians are already comfortable with Digital Retail
Social Digital Shoppers: Heavy users of social media who want to share opinions and experiences through social mediaDigital Shopaholics: Early adopters and experimenters who actively use smart phone apps and in-store technology
Rational Online Shoppers: Internet is preferred mode of shopping but little interest in mobile apps and social media
Value Seekers: Price sensitive customers who barely care about digital shopping. They shop online to get best deals
Occasional Online Shoppers: Infrequent shoppers who generally use digital channels for comparing and tracking delivery
Techno-Shy Shoppers: Shoppers who do not feel confident while using digital technology in any step of shopping
Only 11% of the surveyed Indian population falls into the Techno-Shy Category, implying a
strong inclination toward digital shopping
Additional 11% Indian respondents fall under Occasional Shopper and Value Seeker category.It shows great confidence for digital innovation and sends a strong signal to retailers
Percentage of digital shopper segments by country, 2012 (Capgemini)
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Mobiles opening up new avenues for consumer interaction in
Retail Industry
SelfCheckout &
Scanning
M-Commerce
LoyaltyPoints
Promotions
Coupons
In-storeNavigation
Payments
ShoppingLists Scanning & Self
Checkout
M-Commerce
Loyalty Points
PromotionsCouponsIn-store Navigation
Payments
Shopping Lists
Source: Getting your retail environment ready for mobile, GS1 MobileCom, 2010
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Challenges for Retail in India
Shortage of Skilled Manpower There are very few courses specific to the retail sector and
graduates/post graduates from other streams are recruited.
Lack of Industry Status
Due to the absence of industry status, organized retail in India
faces difficulties in procurement of organized financing andfiscal incentives.
Real Estate
In most cities, it is difficult to find suitable properties in central
locations for retail, primarily due to fragmented private
holdings, infrequent auctioning of large government owned
vacant lands and litigation disputes between owners
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THANK YOU