Growing Sector of Retail Industry

7/28/2019 Growing Sector of Retail Industry

1/12


2/12

Fastest growing sector in Indian Economy.

Traditional way making way for new formatssuch as departmental store, hypermarkets,supermarkets and specialty store.

Western style malls have begun appearing inmetros and cities alike, introducing the Indian

consumer to an unparalleled shoppingexperience.


3/12

The Indian retail sector is highly fragmentedwith 97% of its business being run by theunorganized retailers.

The organized retail however is at a verynascent stage though attempts are being madeto increase its proportion to 10-12% by the year2012 bringing in a huge opportunity for

prospective new players.This sector is the largest source of employment.


4/12

Over the last few years, the retail sales inindia are hovering around 33-35% of GDP.

The last few year witnessed immense growthby this sector, the key drivers being changingconsumers profile and demographics,increase in the No. of international brandsavailable in the Indian market.


5/12

Large Indian players are making significantinvestments in this sector leading toemergence of big retailers who can bargainwith suppliers to reap economies of scale.

Hence discounting is becoming an acceptedpractice.

Proper infrastructure is a pre-requisite in

retailing which would help to modernize Indiaand facilitate rapid economic growth.


6/12

International retailers see India as the lastretailing frontier left as the Chinas retailsector is becoming saturated. However, Govt.

restrictions on the FDI are creating rippleamong the international players like Walmart,Tesco and many other retail giants strugglingto enter Indian market.

As of now Govt. has allowed only 51% FDI inthe sector to 1brand shops like Nike,Reebok,etc.

However other international players are

taking alternative routes to enter the Indianretail market indirectly via Licensing, cash &carry wholesale tradiong.


7/12

Major players Pantaloon Retail

Lifestyle International

RPG Retail

Shoppers Stop Trent (TATA)

Vivek Ltd.


8/12


9/12

India is the least competitive as well as leastsaturated of all major global markets. Thisimplies that there are significantly low entrybarriers for players trying to setup base in India,in terms of the competitive landscape.

A good talent pool, unlimited opportunities, hugemarket and availability of quality raw material atcheaper cost is expected to make India overtakethe worlds best retail economies by 2040,

according to industry players. A major employment generator in future.

The sector is expected to see an investment ofover $30 billion within the next 4-5 years.


10/12

The industry is facing a severe shortage of

talented professionals, especially at the middlemanagement level.

Lack of adequate infrastructure with respect toroads, electricity, cold chains & ports has further

led to the impediment of a pan-India network ofsuppliers.

This sector is yet to become a freffered careeroption for most of Indias educated class that has

chosen sectors like IT, BPO & financial services. Govt. restrictions on the FDI are leading to an

absence of foreign players resulting into limitedexposure plans.


11/12

Stringent labor laws govern the no. of hoursworked and minimum wages to be paidleading to limited flexibility of operations andemployment of part time employees.

Multiple clearance are required by the samecompany for opening new outlets adding tothe costs incurred and time taken to expandpresence in the country.


12/12

Non availability of Govt. land and zonalrestrictions has made it difficult to fing agood real estate in terms of location and size.Also lack od clear ownership titles and high

stamp duty has resulted in disorganizednature of transactions.

Documents

Growing Sector of Retail Industry