Food Retailing India

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FOOD RETAILING IN INDIA

DR. R. K. Patel

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WHAT IS RETAILING?

Retailinga set of business activities that adds valueto the products and services sold to consumers for theirpersonal or family use.

A retailer is a business that sells products and/orservices to consumers for personal or family use.

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RETAILING IN INDIA

Emergence of modern retail formats

Increased pressure on opening up FDI in retail sector

Rapid Evolution of New-age Young Indian Consumers

Rapidly increasing middle class

Rising Incomes levels

Increased Awareness Level among Consumers

Exposure to International Brands

Retail Space is no more a constraint for growth 3


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INDIAN RETAIL SCENARIO

Total Private Consumption Expenditure in India 375Billion USD

Retail Sale 205 Billion USD (55%)

Organized Retail 6.2 Billion USD (3%)

Retailing 35% of GDP

Outlet Estimates Over 12 Million

Format Only 4% larger than 500 sq.ft.

Second Largest Employer after Agriculture4


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THE RETAIL LIFE CYCLE

Innovation

Growth

MaturityDecline

Profit

TIME

SALES

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CLASSIFICATION OF RETAIL STORES

Classification of Retail Stores

Store BasedRetailing

Non-StoreRetailing

Form of OwnershipIndependent retailerChain retailerFranchiseLeased departmentsConsumer co-operatives

Merchandise offeredConvenience storesSupermarketsHypermarketsSpeciality storesDepartmental storesOff price retailersFactory outletsCatalogue showrooms

Direct sellingMail orderTele marketingAutomated Vending

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RETAILING FORMATS IN INDIA

Malls

Specialty Stores

Discount Stores

Department Stores

Hypermarts/Supermarkets

Convenience Stores

MBOs

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ORGANIZED RETAIL

The Indian organized retail industry is valued at about $300billion and is expected to grow to $427 billion in 2010 and$637 billion in 2015.

Retail Market India today is the second fastest growingeconomy of the world after China.

In organised retail the front liners like shop floor executives,sales executives etc are in great demand.

Organised trade in India is highly under-developed ascompared with other emerging markets in Asia, LatinAmerica and Eastern Europe and developed markets likethe US.

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ORGANISED RETAIL MARKET IN INDIA(RS. CR.)

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FOOD RETAILING

Food retailing has come of age

Food items were sold in small road side grocer shops &mandis, now being sold through supermarket stores.

Shopping for groceries is no longer a strenuous anduncomfortable affair.

Food & beverages is the major segment, in organizedRetail of India, worth Rs 8,97,000 crore.

Food retail has surpassed the dominating apparel andaccessories sector.

From simple trading activity, food retailing is now headingto the status of an industry.

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ORGANIZED FOOD RETAIL CHAIN

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THE BUSINESS ENVIRONMENT AND ITSINFLUENCE ON FORMATS

1. The cost and availability of real estate

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2. Regulatory environment

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3. Development of distribution in infrastructure

4..State of technology15


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KEY PLAYERS IN INDIAN FOODRETAIL SECTOR

Reliance fresh

Subhiksha*

Food bazaar

More retail

International player

Wall mart- Super center

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RELIANCE FRESH

Type Supermarket

Founded 30 October 2006

Headquarters Mumbai, India

Key people Mukesh Ambani, CEO

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Reliance Fresh is the convenience store format

Headed by MUKESH AMBANI.

Reliance plans to invest in excess of Rs 25000

crores in the next 4 years in their retail division. The company already has in excess of 560 reliance

fresh outlets across the country.

Reliance Fresh store is approximately 3000-4000

square. feet and caters to a catchment area of 1-2km.

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VISION

To create a blend of a typical Indian BazaarandInternational Supermarket atmosphere withtheobjective of giving the customer, all theadvantages ofQuality, Range and Price associated

with large format stores and also the comfort ofbeing able to touch andfeel the products.

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SUBHIKSHA

Type Discount departmentstore

Founded Chennai, India

(1997)No. of locations 1000 stores

Key people R. Subramanian

Industry Retail

Employees 25,00020


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Subhiksha is an Indian retail chain with more than 1400outlets

selling groceries, fruits, vegetables, medicines andmobile phones.

It was started and is managed by

R. Subramanian

Subhiksha plans to open 1000 outlets by December2008.

plans to invest Rs.500 crore to increase the number of

outlets to 2000 across the country by 2009

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FOOD BAZAAR

Food Bazaar, the supermarket variant offuture group. Has adopted the 'negotiated and predetermined' model to

source vegetables and fruit from farmers across states. The company will use the model to procure potatoes from

farmers in Uttar Pradesh where the quantity and qualityof the produce is predetermined. The company decidesthe price after the harvest to give maximum benefit to thefarmer.

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35+ stores; pan Indian format Bhubaneshwar, Nagpur,Nashik, Durgapur.Sangli

Simple, Indian model

Minimum habit change for the customers

Use small entrepreneurs to the hilt, for categorymanagement

Largest Food Retailer But just a small spec in themarket

Shooting for Rs 1000 Cr this year; Rs 2000 Cr next year

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MORE RETAIL STORE

Type Department store

Founded 2007

No. of locations 40-50(Mumbai)

Industry Retail

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The more. chain of supermarkets, are bright andclean stores, at convenient locations with layoutsthat allow ease of navigation. The product display iswell organised and facilitates ease of choice. The

stores have been designed by Fitch, the leadinginternational retail design firm.

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WAL-MART SUPERCENTER

The number of non-traditional retail outlets,such aswarehouse clubs and discount mass merchandisers,hasincreased substantially in the pastdecade.

Traditional supermarkets are facing seriouscompetitionfrom these retail outlets because nontraditionalretailerswith low-operating margins areable to provide low-priceappeal to consumers.

supercenters,ranging in size from 100,000-200,000

square feet.

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COMPETITIVE ANALYSIS

(FOOD RETAIL)

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SUBHIKSHA

Subhiksha is an Indian retail chain with more than 1400outlets selling groceries, fruits, vegetables, medicines andmobile phones.

Subhiksha plans to open 1000 outlets by December 2008.

Plans to invest Rs.500 crore to increase the number of outletsto 2000 across the country by 2009.

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Subhiksha has seen a considerable growth by offering goodsat cheaper rates and there by increasing its customer base.

It is also dubbed as India's largest retail chain.vision to deliverconsistently better value to Indian consumers.

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Subhiksha now has the pan Indian presence withstores across Delhi, UP, Punjab, Hariyana, Gujarat,Maharashtra, AP, Karnataka and TN. It has recentlycommenced operation in Kerala also.

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Thinking:-

Bringing in a model that is Indian, capable of supportingthe middle class of India.

A business model from India is superior to a businessmodel imported from the West.

We genuinely believe that through efficiency, we are

helping the consumers save more.

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RELIANCE FRESH

Reliance Fresh is the convenience store formatwhich forms part of the retail business of Relianceindustries of india.

Mukesh Ambani Reliance plans to invest in excess ofRs 25000 crores in the next 4 years in their retaildivision.

Stores would provide direct employment to 5 lakhyoung Indians and indirect job opportunities to amillion people, according to the company.

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The company also has plans to train students andhousewives in customer care and quality services for part-time jobs.

Company-owned stores currently totals just $8 billion inIndia.

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The MORE chain of supermarkets, are bright and clean

stores, at convenient locations with layouts that allow ease ofnavigation.

MORE is the answer to the shopping needs of the Indian

housewife who wants a modern and convenient option in herneighbourhood.

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MORE also has a range of products from its ownstable available across value, premium and selectranges.

The Rs 9,000-crore pan-Indian plan would haveneighbourhood supermarkets catering to daily andweekly household shopping needs of customers.

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Food Bazaar supermarket variant of Pantaloon Retail Ltd,has adopted the predetermined' model to sourcevegetables and fruit from farmers.

Almost 20% of the cost is saved if the produce is procureddirectly from the farmers.

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Kishore Biyani-run retail major, Pantaloon, is awaitingamendments in the Agriculture Produce MarketingCommittee (APMC) Act in different states to source itsproduce directly from the farmers.

The floor area for the stores will range from 5,000 sqft to20,000 sqft.

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Of the 8,000 stock keeping units available acrossthe stores, 10% constitute the farm fresh segment,while the international standard is around 12%. Thecompany wants to push the former to 15% in the

next three years.

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FUTURE OF FOOD RETAILING

Innovation on Retail format by targeting specific customer segments and serving

their needs better e.g. working women, single officegoers, etc

by changing the product mix e.g. entirely private labelstores, exclusively fresh produce stores

by offering new forms of convenience and wider range tothe customer e.g. tele retail and internet retail

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Technological Innovations


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Technological Innovations

Self-scan checkouts

Using RFID tags

Web-enabled POS systems, e-SCM systems, e-Procurement systems and warehouse management

systems

Use of cutting edge analytics

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THANK YOU..

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Food Retailing India

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