Retail _PPT_1(2)
0 likes222 views
The document provides an overview of the Indian retail sector including key statistics and trends. Some of the main points summarized are: - Total retail sales in India are USD 550 billion with a GDP per capita income rising from USD 1761 in 2015 to USD 2366 in 2018. - Organized retail makes up 10% of the sector currently but is growing over 20% annually from 2012-2020. - E-commerce is a major growth area for retail in India with online retailers using mobile apps to increase their customer reach. - Key challenges for the retail sector include a heterogeneous market, poor supply chain infrastructure, and competition from unorganized markets.
Retail _PPT_1(2)
- 1. USD 550 Billion Total Retail Sales GDP Per Capita Income From current USD. 1761 in 2015 to USD. 2366 in 2018 10% Organized Retail Sector Penetration > 20% Growth In Organized Retail during 2012-2020 14th Rank Global Retail Development Index (GRDI) 2020- USD 45 - 50 Billion CAGR over next five years – 40%-45% Number of International Brands entering into India Indian Retail Sector- At Glance 1
- 2. 2 Indian Retail Sector Introduction The Indian retail industry is one of the most vibrant industries in the country. It is currently ranked at 20th position among the top 30 developing countries identified by management consulting firm AT Kearney in its 2014 Global Retail Development Index (GRDI). With the growth in the retail industry, the corresponding demand for real estate is also being created. Further, with the online medium of retail gaining more and more acceptance, there is a tremendous growth opportunity for retail companies, both domestic and international. Investment Scenario With the rising need for consumer goods in different sectors including consumer electronics and home appliances, many companies have invested in the Indian retail space in the past few months. Some of them are: Japanese firm SoftBank has invested around US$ 627 million in Snapdeal, which has made it the largest shareholder in the e-commerce company. American fast food chain Burger King plans to open 12 outlets in India over the next three months, six each in Delhi and Mumbai. It is presently looking at a company- owned and company-operated model for its stores, which will be located in food courts and high-street locations. Amazon and Future Group has jointly signed a deal to sell goods online. Both firms will also develop a new line of products across categories to be exclusively sold at Amazon and Future Group's retail Myntra.com has planned to launch The Wedding Store by November, 2014. The Wedding Store will offer wedding wear and accessories (shoes, bags, jewellery, bindis, and so on) that a bride and groom will require. GoJavas, a logistics service provider in the e-commerce space, has introduced a ‘try-before-you-buy’ experience in e-retail transactions. In this, the delivery boys wait at the customer’s house till the customer tries out the product before accepting or returning it. V/S
- 3. Opportunity Snapshot Opportunity size and key retail segments 833 Million 1. Personal Care , Hair Care, Teeth Care 2. Selected Electronics 3. Food & Beverages 600 Million 1. Packaged Foods and Beverages 2. Luxury Products 3. Indentation 4. Consumer Electronics 5. Personal Care, Beauty and Wellness 500 Million 1. Packaged Food Products 2. Mobile 3. Apparels and Accessories 4. Home Care 5. Affordable Luxury 156,000 (USD Millionaires) 1. Home Furnishing 2. Luxury Consumer Electronics 3. Luxury Products Rural Consumers Rural market constitutes 70 per cent of the total population base, but currently accounts only 40 per cent of the total consumption in India. Several National and International Retail and FMCG Players have been planning to explore these untapped markets and are forming various strategies to take maximum advantage. Working Population The population in the working age group of 15 to 54 years is the largest spender on retail. More than 50 per cent of India’s total population falls under this group, indicating the significant influence wielded by this segment on consumer spending Middle Income Household India has an aspirational middle class of 75 Million Households. Over the years, disposable income of Indian Consumer has increased significantly , which is leading to substantial change in their spending habits. Youth As per the census of 2011 , India has also about 500 million Indians under the age of 25 . Young Indians are driving purchases in categories such as mobile phones, fashion , quick service restaurant etc. and are willing to experiment and change habits. Young Indians have access to more money than before ,driving independence , aspiration and demand for products. Growing number of Millionaires The growth in millionaires in India is driving indulgence in luxury products such as fine wines, expensive handbags and branded jewellery . According to Wealth Report 2014, the total number of millionaires in India grew by 51 per cent , second fastest in the Asia Pacific region 3
- 4. Regulatory Framework 51% FDI in Multi Brand Retail • Minimum Investment cap is USD 100 million . 30% of the procurement value of manufactured processes products must be from SMEs. • Minimum 50% of total FDI must be invested in back – end infrastructure within three years of first tranche of FDI. • To ensure Public Distribution System and Food Security System , government reserves right to procure a certain amount of Food grains. • Retail Trading , in any form through e-commerce would not be permissible for companies with FDI engaged in multi- brand retailing. 100 % FDI in single- brand retail • Products to be sold should not be of a single brand only. • Single brand retail trading would cover only products branded during manufacturing • The foreign investor should be the brand owner • Sourcing atleast 30% of the value products sold must be from Indian small industries and cottage industries Goods and Service Tax • The retail sector is subject to multilpity of Indirect Taxes, The Government of India is looking to introduce Good and Service Tax (GST), which would combine service tax and other state –level taxes into a single taxation system. GST would be introduced in early 2016. • Retail Industry currently does not earn any set off credit service tax / local body taxes paid . Implementation of GST would help sett off these taxes and would improve margin significantly. 4
- 5. Trends in Retail Sector 5 Trends in Retail Sector Retail Infrastructure 1. India has emerged as one of the most attractive retail destination in world. The expected CAGR for retail is 13 per cent (2013-2019). 2. Number of super market are expected to increase from 500 in 2006 to about 8500 by 2016. 3. The Number of modern stores are expected to increase from 11,192 in 2006 to 67,100 by 2016 4. India is poised to image as a sourcing hub for several international chain, giving the abundant supply of raw materials and cost competitiveness. Luxury Market 1. The CAGR was around 20 per cent over the period 2012-2015. 2. High growth categories are jewellery, watches and accessories have attracted many PE Players. E-Commerce 1. E-commerce as retail channel, has seen phenomenal growth over last couple of years. 2. India has about one million online traders that sell their product through various e-commerce portals. 3. Online retailers have also started to use the medium of online mobile apps to increase their reach to the customers. Food 54% Ticket 17% Jewelry 17% Perfume 12% Emerging categories for online purchase State Share of Organized Retail Tax Revenue (USD Billion) Maharashtra 12% 0.4 Andhra Pradesh 8% 0.27 Uttar Pradesh 8% 0.27 Tamil Nadu 7.8% 0.25 Gujarat 7.8% 0.25 Share of Top states in Organized Retail
- 6. 6 Challenges in Retail Sector Heterogeneous Market- Highly diverse demographic of Indian Consumer Poor Supply chain Infrastructure- lack of storage and transport logistic often leading to huge wastage. Real Estate Concern- Escalating real estate prices and rentals in large cities due to increase demand. Competition from unorganized market- inherent advantages , such as low cost base, ,more proximity to the customers , negligible real estate challenges Work force related issue- challenge of finding , training and retaining talent Challenges in Retail Sector Key Players in Market Company Key Stores Future Group Big Bazaar, Food Bazaar, Pantaloons, Central Fashion, E-Zone FabIndia Textiles, Home Furnishing, Handloom TATA Group Westside, Landmark, Titan, Croma, Tanishq, Starbucks Reliance Retail Super Market, Jewellery, Digital Gitanjali Nakshatra, Gitanjali Jewels, Giantti, D’damas RP-Snjiv Goenka Group Spencer Hyper, Beverely Hills Polo Club, Music World Company Key Segments Amazon, Flipkart, Snapdeal Books to Electronics Magic Bricks Real Estate Zomato Food rating Blue Stone Jewlery Local Banaya, Grocery Fabfurnish. Pepperfry Furniture