Retail sector in India
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The document defines retailing as the sale of goods or services directly to final consumers. It notes that retailing is a large global industry dominated by developed countries. In India, retailing is dominated by unorganized mom and pop shops, while organized retail makes up a small portion. The retail landscape in India is discussed, along with major players and consumption categories. Challenges and opportunities for retail in India are outlined. Online retailing and its payment methods and challenges are also summarized. The contribution of retailing to the Indian economy and employment are highlighted.
Retail sector in India
- 2. Retailing- Definition According to Philip Kotler “retailing includes all the activities involved in selling goods or Services directly to final consumers for personal , Non business use”. “Every sale of Goods and Services to final consumer” – Food products, apparel, movie tickets; services from hair cutting to e-ticketing.
- 3. A retailer or retail store is any business enterprise whose sale volume comes primarily from retailing”. A retailer may be defined, as a ‘ dealer or trader who sells goods in small quantities’. Any Organization Selling to final consumer is retailing , whether they are A Manufacturer A Wholesaler A Retailer
- 4. 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 Dominated by developed countries. US, EU & Japan constitutes 80% of world retail sales Biggest player in India, Pantaloon’s total group sales is about equal to 2 Wal-Mart super centers annual revenues 38% 27% 13% 8% 3% 2% 9% USA EU Japan China India Russia Others
- 5. 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 and Oceania, behind Japan and China.
- 6. Retail consumption by categories 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. In Rs 00 crores
- 7. Global Players Highly evolved US market has Wal-Mart taking only 8% market share UK market has Tesco with only 13.4% market share China market still does not have a clear leader USA =US$ 2,350 Bn UK=US$ 406 Bn China = US$ 313 Bn
- 8. Big players retail in India Future group- Big bazaar, Food bazaar, Pantaloons etc. Reliance retail- marks & spencer RPG group- spencer Bharti-walmart Tata Tesco- star bazaar
- 9. Small players retail in India Parsvnath retail Vishal mega mart retail Shoppers’ stop
- 10. SWOT analysis Strengths Emerging retail formats like malls, hyper/supermarkets and specialty stores Indian consumers have high disposable incomes Large number of earning young population. Growth of real-estate and Improvement in infrastructure. Huge agricultural sector offering an abundance of raw materials.
- 11. Weaknesses Demographic differences Presence of a significant number of strong and well- established players Relatively small domestic market limits growth opportunities High real-estate and distribution cost are the obstacles for growth of retail in India
- 12. Opportunities Increasing awareness of consumers about products and services Changing consumers’ requirements and lifestyles Innovation for new product development Private label sector has been boosted by economic downturn
- 13. Threats Economic slowdown is having an adverse effect on consumer spending. Rigid government policies and regulations restrict the entry of new players. Price competition among retailers puts downwards pressure on margins. Entry of International players in Indian markets consumes the share of Indian retailers
- 14. FDI Foreign direct investment (FDI) FDI refers to capital inflows from abroad that is invested in or to enhance the production capacity of the economy It usually involves participation in management, joint- venture, transfer of technology and expertise
- 15. FDI policy with regard to India FDI up to 100% for cash and carry wholesale trading and export trading allowed under the automatic route FDI up to 51 % with prior Government approval (i.e. FIPB) for retail trade of ‘Single Brand’ products FDI is not permitted in Multi Brand Retailing in India
- 16. Global players – Eye on India Global players plans to have their presence in India Wal- Mart has already signed a JV with Bharti Enterprises to set up stores Tesco has a service center in Bangalore. Metro AG has cash & carry stores . The Govt. of India currently allows a foreign player to enter the market in JV with an Indian partner More global luxury brands to enter India.
- 17. Retailing: Facts and Trends Internet Retailing is Huge Recession is hurting the high end Category killers usually dominate either on price, selection, store appearance or, better yet, all three
- 18. ONLINE RETAILING A type of electronic commerce used for business-to- consumer (B2C) transactions and mail order, are forms of non-shop retailing. Divided in to 2 parts: 1. B2C 2. B2B
- 19. B2C Business that sells products or provides services to end-user consumers. Business-to-consumer activity exists both online and offline, the acronym B2C has primarily been used to describe the online variety.
- 20. B2B Business-to-business (B2B) describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer. While almost any B2C product or service could also be a B2B product, very few B2B products or services will be used by consumers.
- 21. Customers Online customers must have access to the internet and a valid method of payment in order to complete a transaction. Generally, higher levels of education, occupation of the head of the household and income correspond to more favorable perceptions of shopping online. Increased exposure to technology also increases the probability of developing favorable attitudes towards new shopping channels.
- 22. Payment •Billing to mobile phones and landlines •Cash on delivery •Cheque •Debit card •Electronic money •Gift cards •Postal money order •Wire transfer •Invoice
- 23. Challenges Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws. Taxation, which favour’s small retail businesses. Absence of developed supply chain and integrated IT management. Lack of trained work force. Low skill level for retailing management. Lack of Retailing Courses and study options Intrinsic complexity of retailing – rapid price changes, constant threat of product obsolescence and low margins.
- 24. CONTRIBUTION TO INDIAN GROWTH Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP. The Indian retail market is estimated to be US$ 450 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail market in the world, with 1.2 billion people.
- 25. EMPLOYMENT GENERATION India's retail and logistics industry employs about 40 million Indians (3.3% of Indian population). Company’s coming in after FDI will create 10 mn jobs subsequently.