ORGANIZED RETAIL

SECTOR IN INDIA

Prepared By:
Arun Goel
MBA (4th Sem.)
05015603909
Meaning of Retail:
 Derived from from the French word retaillier meaning 'to
cut a piece off' or 'to break bulk

 Means to sell product or services to final consumers in

small quantities

 Also adds value to products & services sold for final

consumption
International Retail: At a Glance
 One of the world’s largest industry
exceeding US $ 9 trillion

47 Global Fortune 500 companies & 25

Asia's Top 200 companies are retailers 3% 2% 9%
8% 38%

 Dominated by developed countries

13%

27%
US, EU & Japan constitutes 80% of
world retail sales
USA EU Japan China
India Russia Others
Share of Organized Retail
Percentage of Organized Retail

100 85 81
80
55
60
40 36
40 30
20 20
20 4.6
0
M alaysia

Indonesia
T aiw an

T hailand

B razil

P oland

C hina
USA

India
 International Learning
 Total retail contribution in World GDP is 27%
Organized retail in US accounts for 22% of
GDP
 Share of organized retail in developing
markets ranges between 20% to 55%
 Retail markets are organizing faster
 In developed markets, dominant player (Wal-
Mart in US, Tesco in UK) has a significantly
higher share; enjoying up to 8-13% market share
 Departmental stores growth is declining while
‘All-under-one-roof` & ‘neighborhood’
convenience is gaining strength
 Retail Landscape in India
 Indian Retail - dominated by unorganized
sector
 Approximately 2 million Mom and Pop Shops
 Share of organized retail sector is only 4.6%
 FDI in the retail sector not permitted to
protect local retailers (excepting for single brand
& cash and carry formats. In this FDI is 51%.)
 Indian retail sector is one of the least
concentrated in the world.
 The top five companies hold a combined
market share of less than 2%
 India is third largest market in Asia behind
Japan and China.
 Retail consumption by

Indian retail is dominated by food & grocery which contributes > 65% of Rs 9.3t
retail market, almost 99% of this is dominated by kirana stores.
Organized Retail in India

The share of organized retail in total retail pie is set to increase from 3% to
about 10 - 12 % by 2015.
 Key Trends
 Existing players expanding to smaller towns
 Number of existing players like Big Bazaar,
Shopper’s Stop, Piramyd are planning expansion in
smaller cities
 Indian business houses in retail
 Many business houses are planning retail entry /
expansion either on their own or through
partnerships
 Global Players planning entry in India
 Some of world’s largest retailers - evaluating entry
in India including Wal-Mart, Carrefour,Tesco,
IKEA, Best Buy, Lowe's, Kingfisher Group, Auchan,
Woolworth, NTUC etc.
 Shop Rite, Metro, Marks & Spencers, & Spar are
already here
 Some have setup Sourcing / Back-office centers e.g.
Tesco, Wal-Mart, etc.
 Rural opportunity - becoming interesting for
organized retailers
 Current Retail Growth
1400 120
1264
1203 107
1200 1146
1092 100
1040
990
1000 943 85
80
R s '0 0 0 C r

R s '0 0 0 C r
800 68
60
55
600
44
40
400 35
28
20
200

0 0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Total Retailing Market ( Rs '000 Cr) Organized Retailing (Rs '000 Cr)

Indian retail industry ~ Rs 990,037 Cr (USD 300 bn), growing at 5-6% p.a.

Organised retail industry ~ Rs 35,000 Cr (USD 7.7 bn), growing at 25-30% p.a.
SWOT ANALYSIS……………
 Strengths
 Increasing demand driven by the country’s young working population
 Increase in per capita income
 Technology intensive industry
 Weaknesses
 Inadequate Infrastructure
 Government Restrictions on FDI
 Opportunities
 Upcoming international Players
 Indian rural markets offer a sea of an opportunity for the retail sector
 Healthy prospect for the fashion industry
 Threats
 Competition from unorganized Sector
 Increasing Real Estate prices
Gaps in Current Organized Retail
Lack of right formats catering to needs especially “All Under One
Roof” formats

 Absence of single trusted player with pan-India presence

 No investment in supply-chain infrastructure.

 Sole focus on front-end with minimal back-end linkages (DC,

logistics, cold chain, vendor & farmer development, etc.)

 Inconsistent availability, quality & pricing

 Transactional approach, minimal focus on customer service over the

life-cycle
 CONCLUSION……
 The future for organized retail in India is a bright one

The retail industry needs to get organized and drive its

own destiny

 The government needs to relax norms on foreign direct

investment

 Keep in mind buying habits of Indian consumer