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