RETAIL

July 2021
For updated information, please visit www.ibef.org
Table of Contents

Executive Summary 3

Advantage India 5

Market Overview and Trends 7

Strategies 15

Growth Drivers 19

Opportunities 27

Key Industry Contacts 30

Appendix 32

2
Executive summary (1/2)

Increase in Global
Retail market World Bank’s India’s direct
consumer destination
in India market Doing Business selling industry
spending in rank in the
in 2025F 2020 by 2021
2021 retail space

US$ 1,000 billion ~9.1% Rank of India: 5 Rank of India: 63 US$ 2.14 billion

Consumer expenditure in India (US$ billion) Retail market in India (US$ billion)

300 1,050
290
280 289.65 1,000
270 1,000
950
260
250 900
240 850 883
230 245.16
220 800
2020Q3 2020Q4 2020 2025F

Notes: CAGR - Compound Annual Growth Rate, F- Forecast, E - Estimated

3
Executive summary (2/2)

 FMCG sector is the fourth-largest sector in the Indian economy, with

household and personal care accounting for 50% of FMCG sales.

 After an unprecedented decline of 19% in the January-March 2020

Indian online
FY21 FMCG quarter, the FMCG industry displayed signs of recovery in the July-
grocery market
market in India September 2020 quarter with a y-o-y growth of 1.6%. The growth
in 2020 witnessed in the fast-moving consumer goods (FMCG) sector was also
a reflection of positivity recorded in the overall macroeconomic
scenario amid opening of the economy and easing of lockdown
US$ 103.70 billion US$ 3.19 billion restrictions.

 Increasing participation from foreign and private players will boost retail
infrastructure.

FMCG market in India (US$ billion) Revenue from online retail in India (US$ billion)

CAGR 23.15%
70
120
60
100 50 60.00
80 40
60 30
103.70 32.70
40 68.38 20
20 10 13.00 14.50 17.80
0 0
FY18 FY21F 2015 2016 2017 2018 2020F

Notes: CAGR - Compound Annual Growth Rate, F- Forecast

Source: Ernst and Young, Price Waterhouse Cooper, Economic Times, MRRSIndia.com and Assocham - The Associated Chambers of Commerce and Industry of India, Trading
Economics, World Bank

4
Advantage India

5
Advantage India
1. Robust Demand 4. Increasing Investment
► According to the Retailers ► Foreign retailers entering the
Association of India (RAI), the Indian market.
retail industry achieved 93% of ► Cumulative FDI inflows stood at
pre-COVID-19 sales in February US$ 3.47 billion between April
2021; consumer durables and 2000 and March 2021.
quick service restaurants (QSR)
increased by 15% and 18% ► India’s retail sector attracted US$
respectively. 6.2 billion from private equity and
venture capital funds in 2020.
► Increasing purchasing power has
led to growing demand.
1 4 3. Policy Support
► ~51% FDI in multi-brand retail.
ADVANTAGE ► 100% FDI in single-brand retail
under the automatic route.
INDIA
2. Innovation in financing ► Goods and Service Tax (GST)

► Collective efforts of financial

2 3 was introduced for single unified
tax system.
houses and banks with retailers ► To provide a level-playing field to
are enabling consumers to go for stakeholders, the Government is
durable products with easy credit. preparing policies of retail, FMCG
and E-commerce within a single
policy framework.
► The Minister of MSME
announced inclusion of retail and
wholesale trades as MSMEs.
Retail and wholesale trade will
now get the benefit of priority
sector lending under the RBI
guidelines.
Note: FY - Indian Financial Year (April-March), NMDP - National Maritime Development Programme, FDI - Foreign Direct Investment, MMT - Million Metric Tonnes,
Source: Report of the Task force on Financing Plan for Ports, Government of India, JLL report, Anarock Retail

6
 Market Overview and Trends

MARKET OVERVIEW

7
Evolution of retail in India

Pre 1990s 1990-2005 2005-2010 2010 onwards

 Cumulative FDI inflows stood at US$ 3.47

 Manufacturers opened  Pure-play retailers  Substantial investment
billion between April 2000 and March 2021.
their own outlets realised the potential of commitment from large
this market Indian corporates  Retail 2020: Retrospect, Reinvent, Rewrite
 Majority in the apparel  Entry in food and general  Movement to smaller cities and rural areas
segment merchandise category  More than 5-6 players with revenue over
 Pan-India expansion to US$ 1 trillion by 2020
top 100 cities  Large-scale entry of international brands
 Repositioning by existing  Approval of FDI limit in multi-brand retail up
players to 51%
 Sourcing and investment rules for
supermarkets relaxed
 100% FDI in single- brand retail under the
automatic route

Source: Technopak Advisors Pvt Ltd, BCG, News Articles, DPIIT

8
Retail formats in India

MONO/EXCLUSIVE Exclusive showrooms Complete range available

BRANDED RETAIL owned or franchised out by for a given brand; certified
a manufacturer product quality
SHOPS

Focus on particular product Customers spoilt for choice

MULTI-BRANDED categories and carry most of with so many brands on
RETAIL SHOPS the brands available display

Display most of
One-stop shop for
convergence as well as
CONVERGENCE consumer/ electronic
customers; many product
RETAIL OUTLETS lines of different brands on
products, including
display
communication and IT group

Online shopping facility for

Highly convenient - provides
buying and selling products
24X7 access, saves time
E-RETAILERS and services; widely used
and ensures secure
for electronics, health and
transaction
wellness

Note: IT - Information Technology

Source: Sutherland Research

9
Competitive landscape in Indian retail sector

1. Departmental stores 5. Cash and carry stores

 Pantaloon has 342 stores in 78  Metro started the cash and carry model in
towns/cities India -operates 27 stores across Mumbai,
 Westside operates 169 stores across 88 Kolkata, Delhi, Punjab, Hyderabad and
cities Bengaluru
 Shoppers Stop has 83 stores & Lifestyle
5  Reliance Retail operates 52 cash and carry

1
operates across 40 stores in India stores called ‘Reliance Market’, as of FY20
 Reliance Retails operates 670 fashion
concept stores across 350 cities in India

2. Hypermarkets Retail
 Big Bazar, Spencer Easy day and
Reliance are some major players
2 4 4. Specialty stores
 Titan Industries is a large player, with 496
present in the market World of Titan, 262 Tanishq and 509 Titan
 Aditya Birla Retail (More Hypermarket) Eye+ shops
 Vijay Sales, Croma and E-Zone in
- 20 stores
 Trent has 10 stores under retail chain 3 consumer electronics
 Landmark and Crossword in books and
Star
gifts segment
 Big Bazaar operates 295 stores
 Spencer Hyper has 37 stores across
the country
3. Supermarkets/ convenience stores
 Aditya Birla Retail- More Supermarket (645 stores)
 Spencer’s Daily (120 stores)
 Reliance Fresh (621 stores)
 REI 6Ten (350 stores)
 HyperCITY (20 stores)
 Dmart (234)
Source: Company website, Press Release

10
Strong growth in the Indian retail industry

 The retail sector in India is emerging as one of the largest sectors in

the economy. It contributes 10% to GDP and 8% to employment. Market size over the past few years (US$ billion)

 As per Forrester Research, in 2020, India's retail sector was 2,000

estimated at US$ 883 billion, with grocery retail accounting for US$ *CAGR 21%

608 billion. The market is projected to reach ~US$ 1.3 trillion by 1,800
2024.

1,750
1,600
 India will become a favourable market for fashion retailers on the
back of a large young adult consumer base, increasing disposable 1,400
income and relaxed FDI norms.

 Revenue of India’s offline retailers, also known as brick and mortar 1,200

1,200
(B&M) retailers, was expected to increase by Rs. 10,000-12,000
1,000
crore (US$ 1.39-2.77 billion)^ in FY20.

950
 According to the data released by the Ministry of Statistics & 800
Programme Implementation (MoSPI), India’s Consumer Price Index
600

672
(CPI) based retail inflation eased to 4.2% in April 2021, compared to

641
5.5% in March 2021.
400
 According to the Ground Zero Series findings of the consulting firm
RedSeer, the retail sector is expected to recover ~80% of pre-Covid 200
revenue (amounting to US$ 780 billion) by end-2020.
0
 Business activity among micro-retailers is reaching near normal

2021F

2026F
2016

2017

2018
levels, as they are adopting digital business tools to drive efficiency
and growth. The micro-retail players are increasingly taking up digital
book-keeping solutions, as it makes this task simpler and there is a
demand coming from small towns and hinterlands.

Note: *CAGR up to 2018, F - Forecast, ^as per CRISIL

Source: indiaretailing.com, BMI Research, Consumer Leads report by FICCI and Deloitte - October 2018, News Articles

11
Organised retail in nascent stage

Significant scope for expansion

3% 7%
9%

18%

FY19 FY21F

75%
88%
Traditional retail Organised retail E-commerce*

 In FY19, traditional retail, organised retail and E-commerce segments accounted for 88%, 9% and 3% of the market, respectively.

 The organised retail market in India is growing at a CAGR of 20-25% per year.

 The unorganised retail sector in India has a huge untapped potential for adopting digital mode of payments as 63% of the retailers are interested
in using digital payments like mobile and card payments.

 Many fintech companies are competing for their presence in local stores. In May 2020, Paytm announced a US$ 1 billion loyalty programme and
launched online ledger services for kirana stores in India. Other fintech companies such as PayNearby, Phonepe, BharatPe and Mswipe
introduced different services for small shop owners, enabling better digital payments and delivery options at these stores.

 For example, Amazon partnered with local stores to provide a platform for many small shops and merchants on its Amazon marketplace. While,
Walmart has its own network of 28 ‘best-priced’ stores serving local stores across the country.

 In March 2021, Big Bazaar announced expansion into the instant home delivery service, aiming to offer 2-hour delivery guarantee service; it has
started the service in Delhi NCR, Mumbai and Bengaluru.
Note: F - Forecast, * - e-commerce market here refers to sale of products and services through electronic transactions, home shopping is considered a part of e-commerce
Source: BCG , KPMG- indiaretailing.com, Deloitte Report, Winning in India’s Retail Sector, Centre for Digital Financial Inclusion (CDFI) report, Crisil

12
Sector’s high growth potential is attracting investors

 India has occupied a remarkable position in global retail rankings. The country FDI Confidence Index 2019
has high market potential, low economic risk and moderate political risk.
 India’s high growth potential compared to global peers has made it a highly 2.5
favourable destination. According to a study by Boston Consulting Group, India
is expected to become the world's third largest consumer economy by
reaching US$ 400 billion in consumption by 2025.

2.1
 In FDI Confidence Index, India ranked 15th (after US, Canada, Germany, UK, 2
China, Japan, France, Australia, Switzerland and Italy).

1.9
1.87
1.85
1.79
 India ranked first in the Global Retail Development Index 2017 based on rising

1.78
1.72
1.67
1.67
1.65
middle class and rapidly growing consumer spending.

1.62
1.61
1.5

1.59
1.58
1.55
1.54
1.54
 According to Prime Database, shareholding of retail investors in 1,605 listed
companies hit an 11-year high of 7.01% and witnessed ~3.4 million new
‘Demat’ accounts from July 2020 to September 2020.
1
 In July 2021, DP Retail, a subsidiary of Darwin Platform Group of Companies
(DPGC), entered the retail space with the launch of its first megastore in
Andheri, Mumbai. The company would be opening other self-owned exclusive
stores at five locations in Mumbai.
0.5
– The launch signifies the DPGC’s ambitious plan to leverage potential of
the Indian retail space. DP Retail plans to invest Rs. 1,000 crore (US$
134.43 million) in FY21 to expand in other cities and allocated Rs. 100
crore (US$ 13 million) towards market penetration across the omnichannel
0
retail business (including an innovative franchise model).

Belgium
United States

France
Japan

Denmark
Germany

Netherlands
Canada

Switzerland

India
Australia
Italy

Spain
UK

China

Singapore

Sweden
 In July 2021, Dyson announced to increase its retail presence to 12 stores.
 Tanishq, Shoppers Stop and Bestseller India (sells fashion brands Vero Moda,
ONLY and Jack & Jones) plan to add 10-35 stores in FY22.
 In 2021, Lenskart received US$ 315 million funding from Falcon Edge Capital,
Temasek Holdings, KKR. The company plans to use the proceeds to expand
its retail footprint in Southern India.
Note: FDI - Foreign Direct Investment
Source: AT Kearney 2019 FDI Confidence Index, Prime Database

13
Rising prominence of online retail

Online retail in India (US$ billion) Indian E-commerce Market (US$ billion)

80 120
100 111
73.00
60 80
60.00 84
40 60
40
32.70
20 33 39
20
14.50 17.80 14 20
0 0
2016 2017 2018 2020F 2022F 2014 2015 2017 2018 2021F 2024F

 Online retail market is estimated to reach US$ 60 billion by 2020 from US$ 32 billion in 2018. It is projected to reach US$ 73.00 billion by 2022F.
 India’s e-commerce market is estimated to record sales worth US$ 55 billion during 2021 with the addition of 40 million new online shoppers. The
number of online shoppers for 2021 is estimated to reach 190 million compared with 150 million last year and is estimated to reach 300 million
shoppers in the next five years.
 As per the RedSeer report, India is set to become the third-largest online retail market by 2030 after the US and China with an annual Gross
Merchandise value (GMV) of ~US$ 350 billion. The new-age logistics players are expected to deliver 2.5 billion Direct-to-Consumer (D2C)
shipments by 2030. Online used car transaction penetration is expected to grow by 9x in the next 10 years.
 During the festival period in 2020, Amazon, Flipkart and various vertical players sold goods worth US$ 9 billion despite the pandemic onslaught.
 The Government plans to allow 100% FDI in E-commerce under the arrangement that the products sold must be manufactured in India to gain
from the liberalised regime.
 India ranked 73rd in the United Nations Conference on Trade and Development's Business-to-Consumer (B2C) E-commerce Index 2019.
 Online retailers now deliver to 15,000-20,000 pin codes out of nearly 100,000 pin codes in the country.
 By 2024, India's e-commerce industry is expected to increase by 84% to US$ 111 billion, driven by mobile shopping, which is projected to grow at
21% annually over the next four years. In 2020, the most common payment methods online were digital wallets (40%), followed by credit cards
(15%) and debit cards (15%). Online penetration of retail is expected to reach 10.7% by 2024 versus 4.7% in 2019.
 In April 2020, Amazon India announced to invest Rs.10 crore (US$ 1.3 billion) to strengthen its pilot ‘Local Shop on Amazon’ programme, which
added >5,000 local shops and retailers on the platform from >100 cities.
Notes: APMEA - Asia/ Pacific, Middle East and Africa, F- Forecast
Source: MasterCard Worldwide Insights 4Q 2010, ANAROCK, ASSOCHAM, UN Report 'The power of 1.8 billion‘, Nasscom annual guidance 2018, RedSeer Consulting, eMarketer, News
Articles

14
 Strategies

RECENT TRENDS AND STRATEGIES

15
Strategies adopted… (1/3)

1
Strong distribution and logistic network
• It is imperative for a retailer to have a strong distribution and logistic network. Players follow a distribution network .For example, Shoppers Stop
follow a “hub and spoke” model for its distribution network to increase efficiency and productivity network to increase efficiency and productivity.
• In November 2020, Mahindra Logistics Ltd. developed a ‘Built-to-Suit’ warehousing capacity in Tamil Nadu. This workspace will cater to two key
customers in e-commerce and auto-engineering industries..

2
Expansion
• In March 2021, Xiaomi introduced a new initiative ‘Develop with Mi’ (GWM). GWM plans to have 30,000 touchpoints in a year and 6,000+ retail
stores in the next two years.
• In March 2021, Vivo announced plan to open ~100 exclusive retail stores across India in 2021; aims to cross the 650-store mark in India by 2021.
• In March 2021, AP Group announces an expansion plan for their Italian brand – Just Cavalli in India with the launch of 200 offline stores in 2021.
• In June 2021, Reliance Retail operated 7,573 stores in >4,400 cities.
• In July 2021, DP Retail, a subsidiary of Darwin Platform Group of Companies (DPGC), plans to invest Rs. 1,000 crore (US$ 134.43 million) in
FY21 to expand in India and allocated Rs. 100 crore (US$ 13 million) towards market penetration across the omnichannel retail business.

3
Omni-channel retailing
• Retailers are exploring multiple channels to maximise sales. Omni-channel retailing is being adopted by many retailers in India. Shoppers Stop is
making efforts to be an omni-channel retailer. Ezone has launched an online platform, which has led to increase in sales. Omni-channel retailing is
being adopted by companies such as Croma, Reliance Retail Ventures, Aditya Birla Fashion and Retail Limited and, OnePlus.

4
Offering discounts
• Most retailers have advanced off-season sales from 15 days to a month with discounts of 20-70% on certain products. Also, higher discounts and
other value-added services are offered to members.
Source: Company website, News Articles

16
Strategies adopted… (2/3)

5
Offering value-added services
• Companies offer innovative value-added services like customer loyalty programmes and happy hours on shopping deals. Offers for senior
citizens, contests for students and lottery gains are now very common.

6
Leveraging partnership
• To keep customers on shop floors for a longer time and increase conversions, retailers are now pitching to partner with manufacturers, service
providers, and financial companies to create a buzz around certain product categories.
• In March 2021, Unicorn, a premium Apple reseller, announced plan to launch 4-6 new flagship stores in India by FY22.
• In February 2021, Reckitt Benckiser, a consumer health and hygiene company, in partnership with Grofers, an online grocery retailers, launched
the ‘Deliver Safe Programme’. The programme includes processes and protocols to meet the highest standards of cleaning and disinfection.
• In February 2021, Panasonic India joined forces with Fortune Marketing Pvt. Ltd. to expand its presence in the Indian market. Fortune Marketing
Pvt. Ltd. will be responsible for distributing Panasonic’s wide enterprise range, comprising commercial android signage display, 4K UHD
commercial high brightness displays, multi-touch interactive professional displays and professional video wall range of products.

7
Strong supply chain
• Critical components of supply chain planning applications help retailers to maintain profit margins. Innovative solutions like performance
management, frequent sales operation management, demand planning, inventory planning, production planning and lean systems can help
retailers to get advantage over competitors.
• In March 2021, Mi India launched a Rs. 100-crore (US$ 13.62 million) support plan over the next two years for its retail partners.
• In May 2021, Big Bazaar announced that it has rolled out its two-hour delivery services in small cities in India such as Bhopal, Mangalore,
Raipur, Ranchi, Guwahati, Kanpur, Lucknow and Varanasi, to name a few, have seen orders climb over the past week.

Source: Company website, News Articles

17
Strategies adopted… (3/3)

8
Changing the perception
• Retailers are providing more assortments for private level brands to compete with other supplier brands. New product development, aggressive
retail mix and everyday low pricing strategy might help to get edge over supplier brands.

9
Hyper-personalisation
• Indian retailers use hyper-personalisation models based on behavioral data, brands performance, demographic preference and pin codes as
marketing strategy to boosts sales.

10
Cash-on-delivery
• Online retail segment offers cash-on-delivery and manufacturers’ warranty to boost E-retailing in consumer durables sector.
• Cash-on-delivery is the preferred payment option with over 30% buyers opting for it in India.

11
Joint Venture (JV)
• To diversify the product offerings and tab the growing luxury retail segment, retailers are forming JV with foreign luxury brands. Reliance Brands
Ltd. entered a JV with Bally, a Swiss luxury brand, to exclusively market its products in India.
• In May 2019, Warburg Pincus and Runwal Group entered into a JV to form US$ 1 billion retail mall platform.

Source: Company website, News Articles

18
 Growth Drivers

GROWTH DRIVERS

19
Growth drivers for retail in India

1. Favourable 5. Easy consumer

demographics credit and increase
5 in quality products
1

Growth
Drivers
2. Rise in income and 2 4 4. Brand
purchasing power consciousness

3. Change in
consumer mindset

20
Growth drivers for retail in India

6. Investment
1. Consumer preference  In July 2021, Goat Brand Labs, a
 India’s per capita GDP increased to Rs. platform for D2C brands, raised
143,048 (US$ 1,982.65) in FY19 from US$ 36 million and Lenskart
Rs. 129,901 (US$ 1,800.43) FY18. raised US$ 315 million from
 Indian consumers are now shifting more foreign investors.
towards premium brands. 1 6  In September 2020, US private equity
firm Silver Lake announced plan to
invest Rs. 7,500 crore (US$ 1.00 billion)
in Reliance Retail, by Silver Lake in a
2. Brand consciousness Reliance Industries subsidiary after the
 Factors like young demographic US$ 1.35 billion investment in Jio
Platforms earlier in 2020.
composition, increasing personal
disposable income, preference 2 5  In November 2020, Saudi Arabia's
towards affordable luxury and rising sovereign Public Investment Fund (PIF)
middle class population are announced plans to invest in Reliance
developing preferences for specific Retail Ventures Ltd. for 2.04% stake.
brands.  In November 2020, FreshToHome, a
Bengaluru-based online fresh fish and
meat retailer, raised US$ 121 million in
3. Consumer finance 3 4 Series C funding, led by Investment
Corporation of Dubai (ICD).
opportunity  In December 2020, Singapore’s
sovereign wealth fund, GIC Pte Ltd. and
 According to India Ratings and ESR Cayman Ltd. formed a JV to
Research, domestic organised food 4. FDI approval purchase industrial and logistics assets
and grocery retailers are expected worth US$ 750 million in India.
to increase by 10% YoY in FY22,  Department for Promotion of Industry and Internal Trade 5. Hybrid retail model
with organised retailers and e- (DPIIT) approved three foreign direct investments (FDI),
commerce likely to benefit from the Mountain Trail Food, Kohler India Corporation, and In December 2020, Flipkart's independent
ongoing demand for essentials. Merlin Entertainments India in single-brand retail. value-driven platform ‘2GUD’ launched '2GUD
 DPIIT has approved two FDI proposals worth more than Local’, which is aimed at extending the benefits
Rs. 400 crore (US$ 62.45 million) within the retail sector. of e-commerce to traditional retail businesses.

Source: News Articles, Ministry of Statistics and Programme Implementation, Anarock Retail

21
Income growth to drive demand for organised retail

GDP at current prices (US$ billion) GDP per capita at current prices (US$)

3,500 2,400
2,200
3,000

2,156.50
2,000

1,982.65
2,891.87
1,800
2,500

1,800.43
2,667.19
2,640.88

1,765.43
1,750.30
2,602.51
1,600
1,400

2,273.62
2,000

1,403.04
2,039.36

1,200

1,288.63
1,854.99

1,179.28
1,500 1,000
1,674.40

1,058.03
1,482.19

945.92
800
1,302.18

1,000 600
400
500
200
0
-
FY12 FY14 FY16 FY18** FY20***
FY12 FY14 FY16 FY18** FY20***

 Multiple drivers are leading to strong growth in Indian retail through a consumption boom.

 Significant growth in discretionary income and changing lifestyles are among the major growth drivers of Indian retail.

 Easy availability of credit and use of ‘plastic money’ have contributed to a strong and growing consumer culture in India.

 Acceptance and usage of E-retailers by consumers are increasing due to convenience and secured financial transactions.

 Expansion in the size of the upper middle class and advertisement has led to greater spending on luxury products and high brand consciousness.

 India’s real gross domestic product (GDP) at current prices stood at Rs. 195.86 lakh crore (US$ 2.71 trillion) in FY21, as per the second advance
estimates (SAE) for 2020-21 and the per capita income at current prices was estimated at Rs. 127,768 (US$ 1,765.43) in FY21.

 The real GDP in FY 2021-22 is estimated to be Rs. 148.2 lakh crore (US$ 1,977.58 billion).

Source: IMF, **- 2nd Revised Estimates, * - 1st Revised Estimates, ***- 1st Advance Estimate

22
FDI policy details on single and multi-brand retail in India

51% FDI in multi-brand retail Status: Policy passed

 Minimum investment cap is US$ 100 million.

 30% procurement of manufactured or processed products must be from SMEs.
 Minimum 50% of total FDI must be invested in backend infrastructure (logistics, cold storage, soil testing labs, seed farming and agro-
processing units).
 Removes middlemen and provides better price to farmers.
 Development in retail supply chain system.
 50% jobs in retail outlet could be reserved for rural youth and a certain amount of farm produce to be procured from poor farmers.
 To ensure public distribution system (PDS) and food security system (FSS), the Government reserves the right to procure a certain amount
of food grains.
 It will keep food and commodity prices under control. It will also cut agricultural waste as mega retailers would develop backend
infrastructure. Consumers will receive higher quality products at lower prices and with better service.

100% FDI in single-brand retail Status: Policy passed

 Products to be sold under the same brand internationally. Sale of multi-brand goods is not allowed even if produced by the same
manufacturer.
 100% FDI allowed in single-brand retail under the automatic route.
 Single-brand retail entities (SBRT) would be permitted to set off their incremental sourcing of goods from India for global operations during
the initial five years, starting from the 1st April of the year of the opening of first store, as against the compulsory sourcing requirement of
30% of purchases from India. After completion of five-year period, the SBRT entity will be required to meet the 30% sourcing norms directly
towards its India’s operation, on an annual basis.
 100% FDI in retail trading of food products manufactured or produced in India.
 Liberalisation of FDI is expected to give a boost to Ease of Doing Business and Make in India.

23
Indian retail is set to benefit from FDI policy

Benefits of FDI
in Indian retail

Increase in Technological Infrastructure

Removing middlemen
employment advancement investment

Sector Entry route FDI limit Benefiting Indian

manufacturers

Wholesale cash
Automatic 100%
and carry trading

Single-brand
Automatic 100%
product retailing

Multi-brand, Foreign Investment and

51%
front-end retail Promotion Board

24
New goods and service tax (GST) would simplify tax structure

2. CASH FLOW 3. SYSTEM CHANGES

 Tax refunds on goods purchased for resale AND TRANSITION MGMT
implies a significant reduction in the inventory  Changes need to be made to accounting and IT
cost of distribution. systems in order to record transactions in line with
 Distributors are also expected to experience GST requirements.
cash flow from collection of GST in their sales,  Appropriate measures need to be taken to ensure
before remitting it to the Government at the end smooth transition to the GST regime through
of the tax-filing period. employee training, compliance under GST,
customer education and inventory credit tracking.

4. PRICING AND
1. SUPPLY CHAIN
STRUCTURE
2 3 PROFITABILITY
 Elimination of tax cascading
Goods and Service Tax (GST) is expected to lower input
as a unified tax regime is costs and improve
expected to lead to re-evaluation profitability.
of procurement and distribution  Application of tax at all points
arrangements.
Removal of excise duty on
1 4
of supply chain is likely to
require adjustments to profit
products would result in cash margins, especially for
flow improvements. distributors and retailers.

Note: CII: Confederation of Indian Industry

Source: Sutherland Research

25
Recent M&A deals in the Indian retail sector

Acquirer name Target name Year Deal type

Arvind Lifestyle Brands (ALBL)
V-Mart Retail July 2021 Acquisition
(Stores, warehouse, inventory of unlimited brands)
Amazon Perpule March 2021 Acquisition
Tata Consumer Products Limited Kottaram Agro Foods February 2021 Acquisition
Future Group
Reliance Retail Ventures Ltd. November 2020 Acquisition
(Retail & wholesale business, logistic and warehousing business)
Reliance Retail Ventures Ltd. Urban Ladder November 2020 Acquisition (96%)
Flipkart Scapic November 2020 Acquisition

Flipkart Aditya Birla Fashion and Retail Ltd. (ABFRL) October 2020 Acquisition (8%)

Reliance Retail Ventures Ltd. Future Retail August 2020 Acquisition

Reliance Retail Ventures Ltd. Shri. Kannan Departmental Store Private Ltd. (SKDS) March 2020 Acquisition
Amazon Future Retail August 2019 Acquisition (49%)
Aditya Birla Fashion & Retail Ltd. Jaypore and TG Apparel & Decor Pvt Ltd. June 2019 Acquisition
Reliance Industries Ltd. Hamleys May 2019 Acquisition

Future Enterprises Ltd. October 2018 Acquisition (55%)

LivQuik Technology (India) Pvt. Ltd.

September
Amazon and Samara Capital More Acquisition
2018
Genesis Colors Ltd., GLF Lifestyle Brands, Genesis La Mode, Genesis September
Reliance Retail Ventures Ltd. Acquisition
Luxury Fashion Pvt Ltd., GML India Fashion & GLB Body Care 2018
Walmart Flipkart May 2018 Acquisition

Source: Bloomberg and Thomson ONE Banker, News Articles

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 Opportunities

OPPORTUNITIES

27
Growth value proposition

Higher brand consciousness Rising incomes and purchasing power

Demand factors

Growing aspiration levels and

Credit availability
appetite to experiment

Growing young population Changing consumer preferences

and working women and growing urbanisation

Indian retail opportunity

Rapid real estate and

Easy availability of credit
infrastructure development
Supply factors

Emergence of new categories Expansion plans of existing players

Development of supply chain R&D, innovation and

improving efficiency new product development

Source: KPMG International 2011

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Ample growth opportunities in Indian retail industry

1 2 3 4

LARGE NUMBER OF RETAIL PRIVATE LABEL SOURCING BASE LUXURY RETAILING

OUTLETS OPPORTUNITIES  Luxury retailing is gaining
 India‘s price
 India is the fifth-largest  The organised Indian retail competitiveness attracts importance in India. This
preferred retail destination industry has begun experiencing large retail players to use it includes fragrances, gourmet
globally. an increased level of activity in as a sourcing base. retailing, accessories and
 The sector is experiencing the private label space.  Global retailers such as jewellery among many others.
exponential growth, with Walmart, GAP, Tesco and  Luxury market of India is
 The organised retail sector is
retail development taking JC Penney are increasing expected to grow to US$ 30
forecast to witness strong
place not just in major cities their sourcing from India billion by the end of 2020 from
growth in the coming years.
and metros, but also in tier and are moving from third- US$ 23.8 billion in 2017,
II and tier III cities.  The share of private label party buying offices to supported by growing
strategy in the US and UK establishing their own exposure of international
markets is 19% and 39%, wholly-owned/wholly- brands among Indian youth
respectively, while its share in managed sourcing and and higher purchasing power
India is just 6%. Stores like buying offices. of the upper class in tier II and
Shopper Stop and Lifestyle III cities, according to
generates 15 to 25% of their ASSOCHAM.
revenue from private label
brands.
Notes: FMCG - Fast Moving Consumer Goods
Source: Nielsen, Jefferies report

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Key Industry Contacts

30
Key Industry Contacts

Agency Contact Information

111/112, Ascot Centre,

Next to Hotel Le Royal Meridien, Sahar Road, Sahar, Andheri (E),
Mumbai - 400099.
Retailers Association of India Tel: 91- 22 28269527 - 29
Fax: 91- 22- 28269536
E-mail: [email protected]
Website: www.rai.net.in

Address: 510/511 B-Wing Sagar Tech Plaza,

Sakinaka, Mumbai- 400 072.
The Franchising Association of India Tel: 91- 22 - 4054 0590
E-mail: [email protected]
Website: www.fai.co.in

31
Appendix

32
Glossary

 FDI: Foreign Direct Investment

 FMCG: Fast Moving Consumer Goods

 FY: Indian Financial Year (April to March); So, FY10 implies April 2009 to June 2010

 IT: Information Technology

 MoU: Memorandum of Understanding

 MT: Million Tonnes

 MTPA: Million Tonnes Per Annum

 SEZ: Special Economic Zone

 US$: US Dollar

 Wherever applicable, numbers have been rounded off to the nearest whole number

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Exchange rates

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year Rs. Equivalent of one US$ Year Rs. Equivalent of one US$
2004-05 44.95 2005 44.11

2005-06 44.28 2006 45.33

2006-07 45.29 2007 41.29
2007-08 40.24 2008 43.42
2008-09 45.91 2009 48.35
2009-10 47.42 2010 45.74
2010-11 45.58 2011 46.67
2011-12 47.95 2012 53.49
2012-13 54.45 2013 58.63
2013-14 60.50 2014 61.03
2014-15 61.15 2015 64.15
2015-16 65.46 2016 67.21
2016-17 67.09 2017 65.12
2017-18 64.45 2018 68.36
2018-19 69.89 2019 69.89
2019-20 70.49 2020 74.18
2020-21 73.20 2021* 74.50

Note: As of July 2021

Source: Reserve Bank of India, Average for the year

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