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Retail Marketing in India
RETAIL
Definition : Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser .The retail transaction is at the end of the supply chain.
IMPORTANCE OF RETAIL MARKETEconomic GrowthEmployment OpportunitiesMoves the economy into motionProvides the consumer a basic platform to
encounter with goods and a shop keeper
The total retail sales in India will grow from US$ 395.96 billion in 2011 to US$ 785.12 billion in 2015.
Contributes to 8% of the total employment.
Fastest growing sector in Indian Economy
SOME STATISTICS OF INDIAN RETAIL MARKET
CLASSIFICATION OF RETAIL SECTOR IN INDIA
Retail Sector
Organized
Wholesale
Specialist
Unorganized
Traditional Stores
Handcart Vendors
SUPERMARKET - A self-service store offering
a wide variety of food and household merchandise, organized into departments
HYPERMARKET - A hypermarket (from the French hypermarché) is a store which combines a supermarket and a department store
RETAILING SECTORS IN INDIAFood and GroceryClothing FootwearGems and JewelleryPharmaceuticalsMusicBookConsumer Durables
Watches27%
Footwear23%Clothing
12%
Books & Music8%
Health & Beauty7%
Consumer Durables6%
Furnitures6%
Catering4%
Entertainment3%
Jewellery2%
Pharma2%
FORMATS OF RETAIL MARKET IN INDIA
Mono/Exclusive Branded Retail Shops
Franchised/Owned Exclusive Showroom
Complete range of product
Multi-Branded Retail Shop
Same Product Category of
Different Brand
More choices for customers
MAJOR INDIAN RETAIL PLAYERS IN MARKET
Future GroupK Raheja GroupTata GroupRPG GroupLandmark GroupPiramal GroupSubhikshaRelianceAV Birla Group
RETAILING IN RURAL INDIAHaatsMelasVillage retailerMobile retailersVillage market
ORGANISED RETAILING IN VILLAGES
Godrej Aadhar
Hariyali
WHY RURAL MARKET?
Large population Increasing disposable incomeWestern influencesDemand for better qualityDesire for luxury
PROBLEMS
Dispersed population and tradeLow density of shopsInadequate bank and credit and investmentPoor storage system
FOREIGN DIRECT INVESTMENT (FDI)IN INDIAN RETAIL SECTOR
FDI refers to the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor.
INDIAN PERSPECTIVE Indian retail sector is largely closed to outsiders
to safeguard the livelihood of nearly 15 million small store owners
96% of the business run by unorganized retailers Only 51% foreign investment is allowed in single
brand retail with prior government permission. FDI is also allowed in wholesale business.
HOW TO ENTER INDIAN MARKET?CURRENT ENTRY OPTIONS FOR FOREIGN PLAYERS
Franchise Agreements • Most widely used entity route by multinational retailers.• Fast food retailers, Dominos, entered through master franchise while Pizza Hut entered through regional franchise.
Cash and Carry Wholesale Trading
• 100% FDI is allowed in wholesale trading which involves building of a large distribution infrastructure to assist local manufacturers.• Wholesaler deals only with smaller retailers and not consumers.
Strategic Licensing Agreements • Foreign company enters into a licensing agreement with the domestic retailer.• Mango, the Spanish apparel brand has entered India through this route with an agreement with Pyramid, India.
WHY INDIAN MARKET IS SO ATTRACTIVE
AT Kearney’s study on global retail trends found that India is least competitive as well as least saturated of all major global markets.
Good talent pool, unlimited opportunities, huge markets, availability of quality raw materials at cheaper costs, is expected to make India overtake the world’s best retail economy by 2042.
Market share of organized modern retail is just over 5% of the total retail industry, thereby leaving a huge untapped opportunity.
Myths of FDI
Myth 1
Farmers would get higher share of retail incomewith the entry of global organized retail chains.
FACTIn US the farm value share of consumer
expenditure for domestically produced farm foods has steadily declined from 33% to 21% from 1970 to 1994.
According to a European study, the real farm producer price index of total farm production fell by 27% over the period 1990-2002 .
- From The Economic Times
Myth 2
Increase in share of global organizedretail would lower prices in food articles.
FACT
Trends in the BLS (Bureau of Labour studies) food price index in US from 1950 to 2007 tend to somewhat mirror the general Consumer Price Index, with no steady decrease or increase.
- From The Economic Times
Myth 3
Global retail chains would procuredirectly from farmers.
FACTCurrently Wal-Mart procures only 20% (mainly
non-food category) of goods directly from manufacturers.
Most of the organized retailers procure from large wholesalers and other intermediaries.
- From The Economic Times
WHY THE BLAME GAME?CHANGE THE GAME!
SAMRIDDHI Kaushlendra Kumar
IIM-A
Introduced the farm fresh produce(FFP) retail chain supply model.
Economic status of 3000 poor farmers and 500 street vendors in Bihar has gone up.
CONCLUSIONIndian Retail Market has a huge room
for developmentDevelopment and progress should not
come at other’s costProper government measures can
assure healthy growth
Presented By -
BalajiRakeshUnniManjuBlesson