Presentation by
-Gurdeep Singh
-Pushpak Pandey
-Shaleen Agarwal
-Rohan Tandon
-Richa Kohli
Agenda
Retailing : An overview
Indian retail
The change factor
FDI in Indian retailing
Why FDI ?
How FDI ?
Big Bazaar- Company Profile
- Customer Segment
- Vision and Mission
- Swot analysis
- BCG Matrix
- Porter 5 Forces Model
Retailing: An overview
An overview
Retailing
World’s largest private industry
US$ 6.6 trillion sales annually
Fortune 100
9 Retailers
Carrefour, Ahold, Home Depot, Kroger,
Metro, KmartSears, 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
Evolution of Indian retail
Historic/Rural
Reach
Traditional/Pervasiv e Reach
Government
Supported
Modern Formats/
International
Exclusive Brand
Outlets
Hyper/Super Markets
Department Stores
Shopping Malls
Khadi Stores
Cooperatives
Weekly Markets
Village Fairs
Melas
Source of
Entertainment
Convenience Stores
Mom and
Pop/Kiranas
Neighborhood
Stores/Convenience
Availability/ Low
Costs /
Distribution
Shopping
Experience/Efficiency
Evolution of Indian retail
Informal retailing Sector
Typically small retailers.
Evasion of taxes
Difficulty in enforcing tax collection mechanisms
No monitoring of labor laws
Indian retail
Formal Retailing Sector
Typically large retailers
Greater mechanisms enforcement of
High level of labor usage monitoring taxation
Categories of Indian retail
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
Classifying Indian retail
Indian retail
Modern Format retailers
Supermarkets
Hypermarkets
Department Stores
Specialty Chains
(Foodworld)
(Big Bazaar)
(S Stop)
(Ikea)
Company Owned Company Operated
Traditional Format Retailers
Kiranas: Traditional Mom and Pop Stores
Kiosks
Street Markets
Exclusive /Multiple Brand Outlets
Large Indian retailers
Indian retailers
Hypermarket
Big Bazaar
Giants
Shoprite
Star
Department store
Lifestyle
Pantaloons
Piramyds
Shoppers Stop
Trent
Entertainment
Fame Adlabs
Fun Republic
Inox
PVR
The changing Indian consumer
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
†From Euromonitor Retail Survey
The changing Indian consumer
The urban consumer
Getting exposed to international lifestyles
Inclined to acquiring asset
More discerning and demanding than ever
Indian consumer
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
*Data from NCAER
Anticipated growth
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
Industry dynamics
Low domestic competition
Because of fragmented nature of industry
Industry dynamics
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 issues
Real Estate Costs
Supply Chain Inconsistency
Poor Infrastructure
Lack of Skilled Manpower
Growth factors
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
The Indian advantage
Advantage
India
India ranked 1 st in the Global A.T Kearney
Retail Development Index
India
Russia
China
Products
Food & Grocery
Textiles & Apparel
Jewelry & Watches
Consumer durables
Pharmaceuticals
Home Solutions
Books, Music & Gifts
Others
Total
Total Retail
Rs. Billion
6422
980
554
415
364
351
115
1159
10360
Organised
Retail
Rs. Billion
50
185
30
43
10
32
15
111
476
Organised
Retail as % of Total
1
19
5
10
3
9
13
10
5
FDI in Indian retailing
FDI in Retail not permitted
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 Indian retailing
Metro Group of Germany
Cash-and-carry wholesale trading
Proposal faced strong opposition
Current FDI
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
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Hypermarket
The chain of retail stores of the
Pantaloon Retail
(India) Ltd.
89 outlets in India
Headquarter in
Mumbai
Focusing on Value of Money
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.
• 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.
• 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.
• 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
• 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
• WEAKNESS
• LOW PERCEPTION AMONG CONSUMERS
• LESS AVAILABILITY OF STORES
• SUPPLY CHAIN BOTTLENECKS-
(FRAGMENTED MARKETS)
• THREATS
• NEW ENTRANTS AND FOREIGN PLAYERS
• UNORGANISED RETAIL MARKET
• 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
• BARGAINING POWER OF
CONSUMERS
• PRICE SENSITIVE CONSUMERS
• MORE AVAILABLE CHOICES
• THREAT OF SUBSITUTES
• UNORGANIZED RETAIL
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7 P
s ANALYSIS
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§ Value Pricing (EDLP)
§ Promotional Pricing
• Low Interest Pricing
• Psychological Pricing
• Special Event Pricing (Republic Day)
§ Differentiated Pricing
• Time Pricing
§ Bundling
PRICING COMPARISION
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TIME PRICING
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LOW INTEREST FINANCING
PSYCHOLOGICAL PRICING
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• “ 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 100 th
CUSTOMER (Seasonal)
BANNERS AND POSTERS
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• 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.
Reduction in consumer spending
Slow construction of malls
Difficulty in raising working capital
High rentals
Lowering margins
New emerging competitors