Retail-August-2014.Pdf
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CAGR: 13.9% 3.6 Consumer expenditure Rising income and demand for estimated to be USD3.6 trillion quality products to boost 1.0 by 2020 vis-à-vis USD1.0 consumer expenditure trillion in 2010 2010 2020E 2010 2020E 1.3 CAGR: 15% Indian retail one of the fastest 0.49 Retail market in India to reach growing markets in the world USD1.3 trillion by 2020 from due to economic growth USD490 billion in 2013 2013 2020E 2013 2020E CAGR: 30.0% 220 Favourable government policies to boost investor Modern retail market to expand to USD220 billion by 2020 from confidence and, thereby, 27 investments across modern USD27 billion in 2012 retail formats 2012 2020E 2012 2020E Source: Ernst & Young, Price Waterhouse Cooper, Economic Times, Aranca Research Notes: CAGR - Compound Annual Growth Rate, E - Estimate 100 CAGR: 7.6% FMCG market expected to Robust consumption, rural 12 increase to USD100 billion by markets to augment FMCG 2025 from USD12 billion in market 2006 2025E 2006 2006 2025E 67,100 CAGR: 19.6% Increasing participation from 11,192 Modern retail stores projected foreign and private players to to reach 67,100 by 2016 from boost retail infrastructure 2006 2016E 11,192 in 2006 2006 2016E 8,500 CAGR: 32.8% Rising number of tier-2 and tier- 3 cities to enhance Supermarkets to total 8,500 by supermarket space in the 500 2016 from 500 in 2006 country 2006 2016E 2006 2016E Source: indiaretailing.com, Aranca Research Notes: CAGR - Compound Annual Growth Rate, E - Estimate 2013 GrowingDemand demand potential Innovation in financing 2020E • Rapid urbanisation with increasing • Collective efforts of financial Market purchasing power has led to houses and banks with retailers Market Value: growing demand; consumers have are enabling consumers to go for Value: durable products with easy credit USD4.9 also become more brand USD1.3 conscious billion trillion • The untapped rural market has high growth potential Advantage India Increasing investments Policy support • Foreign retailers are continuously • About 51 per cent FDI in multi- entering the Indian market brand retail • Cumulative FDI inflow in retail for • FDI up to 100 per cent in single- April 2000–January 2013 was brand retail. and for cash and carry USD42.7 million; this is expected (wholesale) trading and exports to increase when 51 per cent FDI in multi-brand retail is approved, • Introduction of Goods and Service and the limit in single-brand retail Tax (GST) as a single unified tax is raised to 100 per cent system from next fiscal year Source: Ernst & Young, Technopak; Aranca Research Notes: SITP - Scheme for Integrated Textile Park; FDI - Foreign Direct Investment, 2021 E - Estimated figure for 2020; ASEAN - Association of Southeast Asian Nations Consolidation Expansion Conceptualisation 2010 onward 2005–10 • Large scale consolidation • • Substantial Movement to smaller cities 1990–05 investment and rural areas Initiation commitments by • More than 5–6 players with revenues over USD700 • Pure-play retailers large Indian realised the corporate million • Large-scale entry of potential of the • Entry in food and international brands market general Pre 1990s • FDI in single-brand retail up • Most of them in merchandise to 100 per cent from 51 per apparel segment category • Manufacturers cent opened their own • Pan-India • Approval of FDI limit in multi- outlets expansion to top brand retail up to 51 per cent 100 cities • Rise in private label brands • Repositioning by by retail players existing players • Sourcing and investment rules for supermarkets were relaxed Source: Technopak Advisors Pvt Ltd, Firstpost, Aranca Research Complete range available for a Mono/exclusive Exclusive showrooms owned or given brand, certified product branded retail shops franchised out by a manufacturer quality Multi-branded retail Focus on particular product categories Customers have more choices as shops and carry most of the brands available many brands are on display Display most of convergence as well as One-stop shop for customers; Convergence retail consumer/electronic products, including many product lines of different outlets communication and IT group brands on display It is an online shopping facility for Highly convenient as it provides buying and selling products and E-Retailers 24X7 access, saves time, and services; the facility is widely used for ensures secure transaction electronics, health and wellness Source: Aranca Research Note: IT - Information Technology Retail Books, music and Grocery Food and beverage Department stores Pharmacy gifts Source: Aranca Research Retail Supermarkets/ Departmental stores Hypermarkets Specialty stores Cash & carry stores convenience stores • Pantaloon has 75 • Pantaloon Retail • Aditya Birla Retail • Titan Industries is • Metro started the stores is the leader in (additional 512 a large player, cash-and-carry • Westside this format, with stores) with 368 World of model in India; the operates 74 162 Big Bazaar • Spencer’s Daily Titan, 150 company operate stores stores (134 stores) Tanishq, and 227 16 stores across • Shoppers Stop • HyperCITY (15 • Reliance Fresh Titan Eye+ shops Mumbai, Kolkata, has 66 stores stores), Trent, (700 stores) • Vijay Sales, Delhi, Punjab, • Reliance Retail Spencer’s • REI 6Ten (350 Croma, and E- Hyderabad and launched Trends (Spencer Hyper), stores) Zone are into Bengaluru in this format and Aditya Birla Retail, consumer • Reliance opened currently has and Reliance are electronics its first cash-and- nearly100 stores other players • Landmark and carry store in across India Crossword focus September 2011 on books and gifts and plans to open 20 stores by the end of the fiscal Source: Company websites, Press release, Aranca Research Collaboration for back-end Multiple franchisee model Rural retailing resource sharing Collaborative model for Vertical integration Increasing market reach international products Innovation in new retail formats Direct sourcing arrangements Focus on private labels Source: KPMG International 2011, Aranca Research • Most retailers have advanced off-season sales from 15 days to a month with discounts of Offering discounts 20-70 per cent on certain products • Higher discounts and other value-added services for members • Certain retailers adopt ‘first price right’ approach. Retailers do not offer discounts under Lowering prices this strategy: they directly compete on the selling price by offering a best price without any markdowns • Companies offer innovative value-added services, such as customer loyalty programmes Offering value-added and happy hours on shopping deals services • Offers for senior citizens, contests for students, and lottery gains are now very common • To keep customers on shop floors for a longer time and increase conversions, retailers are Leveraging partnerships now pitching to partner with manufacturers, service providers, financial companies, etc. to create a buzz around certain product categories Source: KPMG International, Aranca Research The retail sector in India is emerging as one of the largest Market size over the past few years (USD billion) sectors in the economy By 2013, the total market size is USD490 billion, thereby 518 490 registering a CAGR of 6.1 per cent since 1998 CAGR: 6.1% 424 368 321 278 201 204 238 1998 2000 2002 2004 2006 2008 2010 2012 2013 Source: Ernst & Young, Deloitte, indiaretailing.com, Economist Intelligence Unit, Euro monitor, Aranca Research Note: CAGR - Compound Annual Growth Rate In 2013, food & grocery accounted for nearly 69 per cent of Market break-up by revenues (2013) total revenues in the retail sector, followed by apparel (8.0 per cent) 1% Food & Grocery 6% 2% Appareal Demand for Western outfits and readymade garments has 2% been growing at 40–45 per cent annually; apparel 6% penetration is expected to increase to 30-35 per cent by Jewellery 6% 2015 Consumer durables and IT 8% Pharmacy Furniture and 69% furnishing Footware Others Source: Technopak, Indian Retail Market January 2013, Deloitte, Aranca Research Organised Retail Penetration (ORP) in India is low (8 per cent) compared with that in other countries, such as the US (85 per cent). This indicates strong growth potential for organised retail in India Organised retail penetration (2013) Contribution to organised retail (2013) Footware 9% 8% 3% Consumer durables Unorganised retail and IT 4% 27% penetration Appareal 8% Jewellery Furniture and 10% furnishing Organised retail Pharmacy penetration 20% Food & Grocery 92% 19% Others Source: Technopak, Indian Retail Market January 2013, Aranca Research The Indian retail market is in its nascent stage; unorganised Significant scope for expansion in organised retail players accounted for 92 per cent of the market during 2013 8% There are over 15 million mom-and-pop stores 24% Organised retail is expected to account for 24 per cent of the overall retail market by 2020 92% 76% 2013 2020E Unorganised retail penetration Organised retail penetration Source: Technopak, indiaretailing.com, Deloitte report, Winning in India’s Retail Sector, Aranca Research Notes: ‘Mom-and-pop’ stores are small stores that are typically owned and run by members of a family, E- Estimate Supermarkets – number of stores Hypermarkets – number of stores 4,000 300 500 40 2006 2011 2006 2011 Specialty stores – number of stores Cash and carry – number of stores 30,000 30 10,000 2 2006 2011 2006 2011 Source: indiaretailing.com, Aranca Research Grocery sales growth across countries (2010) Additional mall space requirement by 2013–14 (million sq feet) 18.4% 45 12.4% 11.1% 10%