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7/30/2019 Rm Pptgrp2

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INDIAN RETAIL INDUSTRY

The India retail market is estimated at US$ 470 Bn in2011, accounting for ~35% of GDP and is expected togrow to US$ 675 Bn by 2016, @ CAGR of 7.5%

The organized retail market is estimated at US$ 26 Bn

and accounts for ~6% of the overall retail market for2011. The organized retail market is projected to grow toUS$ 84 Bn by 2016, @CAGR of 26%

At 35%, Food & Grocery has the highest share of

organized retail . Food & Grocery along with Apparel,Jewellery & Watches and Consumer Electronics & ITaccounts for ~80% of the organized retail market in Indiain 2011.

For the top 8 retail categories ~50% of the retail storesare present in top 25 cities


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SEGMENT WISE ORGANIZED RETAIL MARKET


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RELIANCE RETAIL

Entry through a tie-up with Sahakari Bhandar,Mumbai

Its first foray into Organized Retail was in Nov2006 with Reliance Fresh

Reliance Fresh

Reliance Fresh follows Farm-to-Fork Model It has items like fruits & vegetables, grocery,

bakery, dairy, personal care etc.


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Private label Reliance Select

The store was successful in initial years butlater was subjected to protests from localtraders

Reliance Fuel

Ventured into retailing of fuel throughfranchised petrol bunks in 2006

Good quality product and services wereoffered


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Reliance Digital Started in April 2007 Tie-up with Apple and opened iStores Tie-up with Reva electric car company

Reconnect- Private label launched in Oct 2011 Competition from e-zone, Tatas Croma, Next storesReliance Trends

Specialty chain with Apparels, Luggage and accessories

Offers International brands in lifestyle segment Own private labels and national brands in value segment


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Reliance Footprint

20:80 Private label to other domestic and internationalbrands

Major Players-Bata, Woodlands, Reebok etc.Reliance Jewels Collection from Kolkata, Rajkot, Amritsar etc.Reliance Timeout

Area of 21,000sft

Offers books, toys, music etc. with an Instore Coffeeshop

Major Players- Future GroupssDepot, RPGsBooks&Beyond and K Rahejas Crossword


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Reliance Delight Non vegetarian retail outlet offering fresh fish

and frozen meat

Delivers margins up to 20% Less number of organized players Contributes to 10% of overall revenue to RRLReliance Auto zone

Engages in sales and service of accessories fortwo and four wheelers

Typical store with 6500 s.ft space


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Reliance Wellness

Medicines in Allopathic, Homeopathy andAyurveda

Tie-up with ICICI Lombard for healthinsurance

Competitors- Future Groups Fit and healthy,

RPGs Health and glow

Plans to achieve INR 6000Crore target by

2011


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ITC RETAIL


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ITCS RETAIL VENTURE

Change of image from cigarette to sociallyresponsible company, a value drivenconglomerate

Chairman Yogesh Chandra Deveshwar wasconfident of doing well on entering retailing

ITC forayed into lifestyle retailing, branded

packaged foods, personal care products etc. ITCs Lifestyle Retailing Business Division

(LRBD) grew swiftly and won awards inretailing


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CONTD

Awards provided the impetus for a newchain attempting to achieve its targetaudience

Retailer of the year 2008 by Asian Retail

Congress

Best Supply Chain Practices 2006 by Retailers

Association of India with ITWSignode ITCs line of business included FMCG,

Hotels, IT, Paperboard, Agribusiness


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AGRI-RETAIL IN URBAN AND RURAL AREAS

First company to exploit the recognize andtap the needs of rural people

Initiative aimed at

empowering small and marginal farmers

overcoming inhibitions of poor farming and risktaking

Sanchalaks enabled farmers to gaininformation on weather and market prices


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CONTD

ITCs agribusiness division, conceived E-Choupal as a more back end integratedsupply chain

Also forayed into rural marketing mall calledChoupal Sagar

Spent Rs.4 crs on setting up and receives

nearly Rs.3 crs per annum Plans to expand came to a halt due to

financial crisis and economic slowdown


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CONTD

Entry into urban markets with Choupal Freshsourcing merchandise directly from farmers via E-Choupal

Started operations only in metros and plans toexpand

Emphasis on improving quality and productivity ofdomestic horticulture products through ITCs goodagricultural practice

Combine wholesale with retail

Future groups Pantaloon retail entered into astrategic tie-up with Choupal Fresh for its Fresh andPure section in Food Bazaar


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BARRIERS AND RESPONSES TO EXPANSION

Conglomerate model was gainingmomentum but recession and higher rentalsreduced its pace

Wills lifestyle showrooms had to shut downdue to decrease in sales

Customer-centric activities required to

increase the decreasing sales

Confidence of the chairman


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FUTURE GROUP RETAIL


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Incorporated as apparel retailerManz Wear

Forayed into retailing mainstream in 1997with its 8000 sq ft retail showroom

Pantaloon launched big format retail centreslike Big Bazaar and Central with 15000-20000 and 200,000 sq ft space respectively.

Named as Future Group in 2006 and itsretail arm was renamed as Pantaloon Retail(India) Limited.


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Pantaloon retail has presence in varioussectors of retail in multiple formats

Based on value formoney psyche of indian

middle class Turnover surged from Rs. 285.3 Cr in 2002

to Rs. 5048.9 Cr in 2008

PAT jumped from Rs. 7 Cr. To Rs. 126 CrMarket capitalization increased from 60 Cr to

3737.8 Cr.


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BUSINESS MODEL SUSTAINABILITY

It was planned to restructure the company andrename it as Future markets and consumerDivision

A holding company with two subsidiaries- FutureValue Retail (Fashion Brands) and FutureSpecialty Retail (Supermarket Chains)

Postponed due to expectations of new FDI

policy of the government Has ambitious plans once 100% FDI is allowed

in multi-brand retail


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BUSINESS CONVERGE, BUT BUSINESS MODELS

DIVERGE

Model that extends services to value basedcustomersBiyanis Future Group

Big Bazar is targeting the middle and lowerincome strata alike

ITC is working towards an image in lifestylesegment

Future Group diversified into Future Capitalholdings, logistics, and Pantaloon Retail

ITC expanded into agribusiness and lifestyleretailing


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WHAT IS RETAILING ALL ABOUT?

It is not about reselling things in a shop

Decisions of make or buy, in house oroutsource are critical ones

Right mix of manufacturing products andoutsourcing of processes is important


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ITC Model

It does not have manufacturing facilities

Instead outsources the production of all its

merchandiseApparel designs are made in association with

ADIG( American Design Intelligence Group), USbased firm

Hired its own set of designers

100% Outsourcing


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Practices concepts like JIT Production, FTL(Fulltruck load) and RDC(Regional DistributionCenters)

Replenishes stock within 24 hours in major

markets and 48 hours all over India Strong presence comes from cottage and

SMEs Notebooks outsourced from Tamil NaduAgarbattis are made in association with Sri

Aurobindo Ashram HACCP Certified(Hazard analysis and critical

control points)


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Future Group Model Value based volume business 98 Big bazaar outlets(2009), 214 ( As of June 2012)

Source: Wikipedia

Reseller that sources products in bulk Purchased 70% of Adhaar which will exploit rural retailing

chances In-house brands- Koryo and Sensei Private labels are sourced from China It has centers in Hong Kong and China Backward integration helped in maintaining its bottom line Has its own supply chain arm, FLSL which also serves external

business parties


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Reliance Model

Tie-up with ITC Choupal, Dole and Chiquito forsupply of fruits and vegetables

Rural sourcing hubs in WB, HP, Uttaranchal

Source televisions from Videocon to introduce privatelabels

For Reliance Wellness, deal with Cipla

Tie up with 37 manufacturing partners for Jewellery To resolve supply chain issues, Reliance made a tie

up with UK based supply chain major


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WHO WILL WIN?

With innumerable retailers, ITC has a chanceto win

RRL is relying on its Stand alone specialty

stores through retail conglomerate model

Future Group proved its success butrecession has dimmed its store-in-store

formats and malls


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Decrease in footfalls and reducing profits

Three retailers planning to sell their privatemerchandise through Kirana Stores

FDI in multi-brand retail may bring a newhope to the current scenario

But, Only time would tell!!!

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