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Organized Retail
The Opportunities Ahead
Retail – the largest private industry in world economy
Source : Euromonitor, European Chemical Industry Council: Automotive News; Wall Street Journal; Chemical market Reporter; IDATE; Global Vantage
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Pharmaceuticals; diagnostice
telecom
Automotive
Electronics
Energy
Chenmicals
Packaged goods
Construction / Engineering
Financial services
Retail
Sales (USD Trillion) 1999
Retailing – the largest private industry in the world
• Over 50 of the Fortune 500 companies are retail companies.
• 25 of the Asian top 200 companies are retail companies.
• The world’s largest company is a retail company. (Wal-Mart – last valued at Rs 1,091,250 crore)
• Retail industry accounts for 35% of our GDP • Estimated industry size - USD 205 bn (INR 230,000
cr) in 2004.• Highest number of outlets per capita - 12 million
outlets • Lowest per capita retail space - 2 sft per person as
compared to 16 sft per person in USA• Only 4% of the country’s outlets are larger than 500
sft
Source: KSA Technopak
Current Retail scenario in India
India’s retail setup is therefore crowded with small outlets, largely disorganized and primarily owner managed
Organized Retail
Organized Retail arrived in India in the 90’s
• 1999 Rs 550 Crore
• 2002 Rs 4,000 Crore
• 2004 Rs 28,000 Crore
• 2005 Rs 35,000 Crore
Organised Retail Penetration
Examples of Growth in Emerging Markets
Years taken for organized retail to grow from <5% to over 20%
INDIA IS STILL AT 2.5%
Source : MG1, team analysis
Forecast 2010
• Organized retail is expected to grow at 30% - 35% p.a. to become USD 24 bn (INR 100,000 cr) by 2010
• Organized Retail Penetration (ORP) will increase from less than 3% in 2005 to 8% by 2010
• FDI in real estate will accelerate pace of development of retail infrastructure
• Investments in organized retailing are estimated to touch USD 4,000 Mn (INR 20,000 cr) by end of 2010
Source: KSA Technopak, HSBC Report
Development Curve of Organised Retail
India is one of the most youthful countries in the world with 53% of the
population less than 25 yrs of age
Growth Drivers - Young & rapidly evolving consumers
Within a decade the number of people in age group of 20 – 49 would
increase 30% from 395mn in 2000 to 510 mn in 2010
Currently estimated at 92 Mn the middle class (family income between INR 200,000 – 10,00,000 p.a.) is expected to be around 153 Mn by 2010
Growth Drivers – Middle Class Population
Growth Drivers – Retail Infrastructure
• India will have 225 malls by 2007 spread over 50 cities
• Relaxation in FDI in Real Estate to give further impetus
• Real Estate Mutual Funds ( REMFs) & Real Estate Investment Trusts ( REITs) comes to India
Organized Retail
Emerging Opportunities
Retail – Largest Employer in the World
Increased employment opportunities
- The annual employee turnover of Wal-Mart is more than the entire workforce of General Motors
- 18% of the US workforce is employed in retail
Socioeconomic Impact of McDonalds on the US Job Market
• Employs more than 5,00,000 people• Largest employer of High School Students • 12.5 % of the US workforce has worked for McDonalds• 1 out of 15 American got his/her 1st Job at McDonalds• Nations largest Job Training Organisation -Bigger than
the US Army – teaching the future US workforce “ work routines,job discipline and organisational teamwork
McDonalds captures 1 out of every 6 restaurant visits in the US market
Retail – Opportunities for Entrepreneurs
- World of Franchising
- Specialized retail formats
Bangles, Candy, Kite, - opportunities are immense !!