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CHAPTER 2

RETAIL IN INDIA

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Retail In India: Some Facts &

Figures

India has emerged as the fourth largest

economy in the world in terms ofPurchasing

Power Parity

It is the twelfth largest consumer market in theworld

Almost 21 million people are believed to be

employed in the retail sector, which is 7% ofthe total national workforce

But, retail has not yet been accorded the status

of an industry

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The Concept Of Organised Retail

Unorganised sector- units whose activity is not

regulated by any statute or legal provision,

and/or those which do not maintain regular

accounts Unorganised form of retail - those forms of

trade which sell an assortment of products and

services ranging from fruits and vegetables toshoe repair

Organised form of retail- typically a multi-outlet

chain of stores or distribution centres run by

professional management

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The Evolution Of Retail In India

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Drivers Of Retail Change In

India

Socio-economic factors

Changing income profiles

The age factor

The changing role of women and the evolving

family structure

The changing consumption basket

Increased credit friendliness

Geographical dispersion of market potential

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The Size Of Retail In India

Segment Composition Size (Rs.) Key players

Food and Grocery Fresh groceries, branded

packaged foods, personal

hygiene products and toiletries

and dry unprocessed groceries

Total-1200,000 crore

Organised- 5000 crore

Food Bazaar, Subhiksha,

Reliance Fresh

Food Services Fast Food, cafes, restaurants,

locations offering cateringservices

Total-57,000 crore

Organised- 3,940 crore

McDonalds, KFC, Jumbo King,

Barista, Caf Coffee Day

Clothing & Textiles Fabric manufacturers and

readymade garments

Total-113,500 crore

Organised- 21,400 crores

Arvind Brands, Madura

Garments, Raymonds, Park

Avenue

Consumer Durables Televisions, refrigerators,

washing machines, air

conditioners and microwaves

Total-41,500 crore

Organised- 4,300 crore

Strong regional players-

Videocon Plaza, BPL Gallery,

Vijay Sales

Footwear Footwear for men, women and

children

Total-13,750 crore

Organised- 5200 crore

Bata, Metro Shoes, Lakhani,

Adidas , Reebok

Jewellery Mainly, Gold Jewellery &

diamonds

Total-52,000 crore

Organised- 1,450 crore

Tanishq, Gili

Books, Music and Gifts Various Books, Music and Gifts Total-11,500 crore

Organised- 1,450 crore

Land Mark, Crossword,

Higginbothams, Oxford Bookstore

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Rural Realities: Beyond Urban

Boundaries

What is rural?

- Any habitation where the population density is less than 400 per

sq.km

- Where at least 75 per cent of the male working population is

engaged in agriculture- Where there isnt any municipality on board

Rural Retail opportunities

- Spurt in the purchasing capacity of farmers- Marketable surplus of farm produce

- High incomes combined with low cost of living

- Consists of approximately 128 million households

Current key players- ITC- e-choupal, Hariyali Kisan Bazaars

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Foreign Direct Investment In Retail

IMF-OECD

Glossary of

FDI terms

and

definitions

Foreign direct investment reflects the objectiveof obtaining a lasting interest by a residententity in one economy (direct investor) in an

entity resident in an economy other than that of

the investor (direct investment enterprise).The lasting interest implies the existence of along-term relationship between the directinvestor and the enterprise and a significantdegree of influence on the management of the

enterprise. Direct investment involves both theinitial transaction between the two entities andall subsequent capital transactions betweenthem and among affiliated enterprises, bothincorporated and unincorporated."

In short, FDI is a method of allowing external

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In India, FDI in retail is not allowed

An international retailer can enter the Indian

retail market through-

Hi-Tech items/ items requiring specialized aftersales service

Social sector items

Medical and diagnostic items Items sourced from the Indian small sector

Two-year test marketing

Foreign Direct Investment In Retail

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Challenges To Retail Development In

India

Lack of recognition as an industry

High costs of real estate

Very high stamp duties on transfer of property

Lack of adequate infrastructure

Multiple and complex taxation system

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Potential

Entrants

Substitutes

Suppliers Buyers

Industry

Competitors

Rivalry among

existing firms

Source: Competitive Strategy, Michael

Porter, pg 4

Bargaining

power of

suppliers

Threat of new

entrants

Threat of substitute

products orservices

Bargaining

power of buyers

Five Forces Of Competition