2. Agenda
Retailing : An overview
Indian retail
The change factor
FDI in Indian retailing
Why FDI ?
Big Bazaar- Company Profile
- Customer Segment
- Vision and Mission
- Swot analysis
- BCG Matrix
- Porter 5 Forces Model
How FDI ?
3. Retailing: An overview
Retailing
World’s largest private industry
US$ 6.6 trillion sales annually
Fortune 100
9 Retailers
Carrefour, Ahold, Home Depot, Kroger,
Metro, Kmart-Sears, Target, Albertsons’
Indian Retailing
Largest employer after agriculture - 8%* of
population
Highest outlet density in world
Around 12 mn outlets
Still evolving as an industry
Long way to go
An overview
4. Weekly Markets
Village Fairs
Melas
Convenience Stores
Mom and
Pop/Kiranas
Khadi Stores
Cooperatives
Exclusive Brand
Outlets
Hyper/Super Markets
Department Stores
Shopping Malls
Traditional/Pervasiv
e Reach
Government
Supported
Historic/Rural
Reach
Modern Formats/
International
Evolution of Indian retail
Source of
Entertainment
Neighborhood
Stores/Convenience
Availability/ Low
Costs /
Distribution
Shopping
Experience/Efficiency
5. Evolution of Indian retail
Informal retailing Sector
Typically small retailers.
Evasion of taxes
Difficulty in enforcing tax collection
mechanisms
No monitoring of labor laws
Formal Retailing Sector
Typically large retailers
Greater enforcement of taxation
mechanisms
High level of labor usage monitoring
Indian retail
6. Categories of Indian retail
Corporate Houses
Tatas: Tata Trent
RPG group: Food World, Health and
Glow, etc
ITC: Wills Life Style
Rahejas(ShoppersStop),
Hiranandani(Haiko), DLF(DT cinemas) etc.
Dedicated brand outlets
Nike, Reebok, Zodiac etc
Multi-brand outlets
Vijay Sales, Viveks etc
Manufacturers/ Exporters
Pantaloons, Bata, Weekender
Indian retail
7. Classifying Indian retail
Modern Format retailers
Supermarkets (Foodworld)
Hypermarkets (Big Bazaar)
Department Stores (S Stop)
Specialty Chains (Ikea)
Company Owned Company Operated
Traditional Format Retailers
Kiranas: Traditional Mom and Pop Stores
Kiosks
Street Markets
Exclusive /Multiple Brand Outlets
Indian retail
8. Large Indian retailers
Hypermarket
Big Bazaar
Giants
Shoprite
Star
Department store
Lifestyle
Pantaloons
Piramyds
Shoppers Stop
Trent
Entertainment
Fame Adlabs
Fun Republic
Inox
PVR
Indian
retailers
9. The changing Indian consumer
Greater per capita income
Increase in disposable income of middle
class households
20.9%* growth in real disposable income in
’99-’03.
Growing high and middle income population
Growing at a pace of over 10%* per annum
over last decade
Affordability growth
Falling interest rates
Easier consumer credit
Greater variety and quality at all price
points
Indian
consumer
†From Euromonitor Retail Survey
10. The changing Indian consumer
The urban consumer
Getting exposed to international lifestyles
Inclined to acquiring asset
More discerning and demanding than ever
No longer need-based shopping
Shopping is a family experience
Changing Mindset
Increasing tendency to spend
Post Liberalization children coming of age
100 mn 17-21 year olds*. Tend to spend
freely.
Greater levels of education
Indian
consumer
*Data from NCAER
11. Anticipated growth
Market size
Current market size is roughly US$ 286 bn*
96% of the 12 Million stores are less than 500
Sq. ft.
Forecast Growth rate for the retailing
industry is roughly 8.3% for 2003-2008
Sales from large format stores would rise by
24-49%**
Formal and modern format retailing would
enjoy rapid growth
Anticipated
growth
12. Industry dynamics
Low domestic competition
Because of fragmented nature of industry
Lack of exposure to global best practices
Low entry barriers for unorganized retailing
Moderate entry barriers for organized
retailing
Wholesale system under-invested leading to
20-40% wastage
Non level playing field issues
Wide differences in treatment of small and
large retailers
Industry
dynamics
13. Industry dynamics
Real Estate Costs
Supply Chain Inconsistency
Poor Infrastructure
Lack of Skilled Manpower
issues
14. Growth factors
Growth determining factors
Government Policy
Infrastructure development
GDP growth
Employment generation and job creation
In several new sunrise industries
Implies greater purchasing power
Growth
factors
15. The Indian advantage
India ranked 1st in the Global A.T Kearney
Retail Development Index
India
Russia
China
Advantage
India
16. THE SIZE OF THE OPPORTUNITY
Products
Total Retail Organised Organised
Rs. Billion Retail Retail as %
Rs. Billion of Total
Food & Grocery 6422 50 1
Textiles & Apparel 980 185 19
Jewelry & Watches 554 30 5
Consumer durables 415 43 10
Pharmaceuticals 364 10 3
Home Solutions 351 32 9
Books, Music & Gifts 115 15 13
Others 1159 111 10
Total 10360 476 5
17. FDI in Indian retailing
Current Indian FDI Regime
FDI not permitted in retail trade sector,
except in:
Private labels
Hi-Tech items / items requiring
specialized after sales service
Medical and diagnostic items
Items sourced from the Indian small
sector (manufactured with technology
provided by the foreign collaborator)
For 2 year test marketing (simultaneous
commencement of investment in
manufacturing facility required)
FDI in Retail
not permitted
18. FDI in Indian retailing
Metro Group of Germany
Cash-and-carry wholesale trading
Proposal faced strong opposition
Entities established prior to 1997
Allowed to continue with their existing
foreign equity components.
No FDI restrictions in the retail sector pre-
1997
Foodworld
51:49 JV between RPG and Dairy Farm
International,
Leading food retailer in India now
Mc Donalds
Current FDI
19. QuickTime™ an d a
decompressor
are needed to see this picture.
Hypermarket
The chain of retail
stores of the
Pantaloon Retail
(India) Ltd.
89 outlets in India
Headquarter in
Mumbai
Focusing on Value
of Money
20. COMPANY PROFILE
Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of
India’s leading business houses with multiple businesses spanning across the
consumption space. While retail forms the core business activity of Future Group,
group subsidiaries are present in consumer finance, capital, insurance, leisure
and entertainment, brand development, retail real estate development, retail
media and logistics.
Led by its flagship enterprise, Pantaloon Retail, the group operates over 12
million square feet of retail space in 71 cities and towns and 65 rural locations
across India. Headquartered in Mumbai (Bombay), Pantaloon Retail employs
around 30,000 people and is listed on the Indian stock exchanges. The company
follows a multi-format retail strategy that captures almost the entire
consumption basket of Indian customers. In the lifestyle segment, the group
operates Pantaloons, a fashion retail chain and Central, a chain of seamless
malls. In the value segment, its marquee brand, Big Bazaar is a hypermarket
format that combines the look, touch and feel of Indian bazaars with the choice
and convenience of modern retail.
21. In 2008, Big Bazaar opened its 100th store, marking the fastest ever organic
expansion of a hypermarket. The first set of Big Bazaar stores opened in
2001 in Kolkata, Hyderabad and Bangalore.
The group’s speciality retail formats include, books and music chain, Depot,
sportswear retailer, Planet Sports, electronics retailer, eZone, home
improvement chain, Home Town and rural retail chain, Aadhaar, among
others. It also operates popular shopping portal.
Future Capital Holdings, the group’s financial arm provides investment
advisory to assets worth over $1 billion that are being invested in consumer
brands and companies, real estate, hotels and logistics. It also operates a
consumer finance arm with branches in 150 locations.
22. Customer Segment
Big Bazaar target to upper middle class and
higher customers.
The large and growing young working
population is a preferred customer segment.
Big Bazaar specially target working women
and home maker who are the primary
decision maker.
23. Mission & Vision
Future Group shall deliver Everything,
everywhere, every time for every Indian
Consumer in the most profitable manner.
We share the vision and belief that our
customers and stakeholders shall be served only
by creating and executing future scenarios in the
consumption space leading to economic
development
24. SWOT ANALYSIS
STRENGTHS
EVERY DAY LOW PRICING
GOOD INFRASTRUCTURE
CONSUMER PREFERENCES
DIVERSE MARKET COVERAGE
AWRENESS ABOUT THE BRAND HIGH AMONG MASSES
OPPORTUNITIES
SUB URBAN UNTAPPED MARKET
“ONE STOP” CONCEPT UNKNOWN YET
EVOLVING CONSUMER ORIENTATION
CO BRANDING AND FRANCHISING FOR FASTER
GROWTH
25. SWOT ANALYSIS
WEAKNESS
LOW PERCEPTION AMONG CONSUMERS
LESS AVAILABILITY OF STORES
SUPPLY CHAIN BOTTLENECKS-(FRAGMENTED
MARKETS)
THREATS
NEW ENTRANTS AND FOREIGN PLAYERS
UNORGANISED RETAIL MARKET
26. 5 FORCES PORTER MODEL
RIVALRY AMONG COMPETITORS
RELIANCE,MORE,VISHAL,NEXT,SPENCERS
NEW ENTRANTS
WALMART,CARREFOUR,METRO,IKEA
FOREIGN PLAYERS ALLOWED TO SOME EXTENT
BARGAINING POWER OF SUPPLIERS
SUPPLIERS HAVE A HUGE UNORGANISED SECTOR
TO CATER TO
27. Contd…
BARGAINING POWER OF CONSUMERS
PRICE SENSITIVE CONSUMERS
MORE AVAILABLE CHOICES
THREAT OF SUBSITUTES
UNORGANIZED RETAIL
31. PROMOTION
•“SAAL KE SABSE SASTE 3 DIN”
• FUTURE CARD (Discount Upto 3%)
• SHAKTI CARD
• JUNK SWAP OFFER
• BRAND AMBASSADOR: M.S. DHONI
• ADVERTISMENT (Print Ads, T.V., Radio)
• POINT OF PURCHASE PROMOTION
• GIFT TO EVEY 100th CUSTOMER (Seasonal)
QuickTime™ an d a
decompressor
are needed to see this picture.
32. PEOPLE
• People Are The Customers Which Are The
Biggest Asset Of A Company.
• Well Trained Staff.
• Appearance.
• Presently Around 10000 Workers Are Working
And Around 500 Workers Are Recruited Every
Month.
• High Security For Safety Of Customers.
33. Problems ahead
Reduction in consumer spending
Slow construction of malls
Difficulty in raising working
capital
High rentals
Lowering margins
New emerging competitors