The Indian Retail Scene

HASSAN AL BANNA
 The Indian Retail Scene
 With a three-year compounded annual growth
rate of 46.64 per cent, retail sector is the fastest
growing sector in the Indian economy.
 Traditional markets are transforming themselves

in new formats such as departmental stores,

hypermarkets, supermarkets and specialty stores.

HASSAN AL BANNA
 By 2010, organized retailing in India will cross the
US$ 21.5-billion mark from the current size of US$
7.5 billion.
 The Indian retail market is of enormous size about

US$ 350 billion.

 But organized retail is not so huge and it is at only

US$ 8 billion.

HASSAN AL BANNA
Global Retail Development
Index,
Country
2008
2008 2007 Change
Rank Rank

Vietnam 1 4 +3
India 2 1 -1
Russia 3 2 -1
China 4 3 -1
Egypt 5 14 +9
Morocco 6 15 +9
Saudi Arabia 7 10 +3
Chile 8 6 -2
Brazil 9 20 +11
Turkey 10 13 +3

HASSAN AL BANNA
Countdown to India's retail revolution.
Jobs in demand.
TOP 10 Recruiters.
Key retail formats

HASSAN AL BANNA
 Countdown to India's
retail revolution
 The economy is growing by 8% a year, its stock
market rose by nearly 40% in 2005 and foreign
investors are flooding in.
 There are about nine million small grocery shops in

India.
 It is estimated that 70 million Indians in a population

of about 1 billion now earn a salary of $18,000 a

year, a figure that is set to rise to 140 million by 2011.

HASSAN AL BANNA
Job roles in demand Comments
   Customer         Responses received from companies 
       care and    from the sector show that in the year 2006 
       sales executives companies faced shortage in the following 
   Category / line /  professional categories –
       floor managers  
   Merchandisers • Operations / shop floor executives:  
   Visual        shortage to the extent of 20%
       merchandisers • Visual merchandisers: shortage to the 
   Store managers    extent of 50%
  •  Purchase managers / merchandisers: 
   shortage to the extent of 30%

Source: Ficci Industry Survey

HASSAN AL BANNA
Employment Index

HASSAN AL BANNA
HASSAN AL BANNA
HASSAN AL BANNA
 TOP 10 Recruiters in
Recruiters Retail SectorTotal No. Of
Vacancies
1. Metro 79
2. Trent Ltd. 30
3. Pantaloon Retail India Ltd 21
4. Shoppers Stop 17
5. Spencer 16
6. Big Bazar 16
7. Aditya Birla MORE 13
8. Vishal Retail 11
9. Citi Mart 8
10. Eagaro HASSAN AL BANNA
5
 KEY RETAIL FORMATS
Cultural and regional differences in India are the
biggest challenges in front of retailers. This factor deters
the retailers in India from adopting a single retail format.
Hypermarket is emerging as the most favorable format
for the time being in India.
The arrival of multinationals will further push the
growth of hypermarket format, as it is the best way to
compete with unorganized retailing in India.

HASSAN AL BANNA
What is Recession ?
What causes recession ?
Impact on India.

HASSAN AL BANNA
 What is Recession
 A recession is a contraction phase of the
business cycle.
 National Bureau of Economic Research is the

official agency in charge of declaring that the

economy is in a state of recession.

HASSAN AL BANNA
 What causes Recession
 An economy typically expands for 6-10 years and
tends to go into recession for about six months to
2 years.
 A recession normally takes place when

consumers loose confidence in the growth of the

economy and spend less.
 This leads to decrease demand in goods and

services, which in turn leads to decrease in

production, lay-offs, and a sharp rise in
unemployment.

HASSAN AL BANNA
 Impact on India
 Despite the global economic slowdown, Indian
retailers are still optimistic about the India growth
story.
 The India economy is likely to lose between 1 to 2
percentage points in GDP growth in the next fiscal
year. The Indian economy is more stable than other
economies across the world.
 Fashion retail has not been impacted in a big way.
Not even 0.5 per cent of the working population has
been hit in India

HASSAN AL BANNA
HASSAN AL BANNA
 Subprime losses till date
Bank Losses
Citigroup $18.0 billion
UBS $13.5 billion
Morgan Stanley $9.4 billion
Merrill Lynch $8.0 billion
HSBC $3.4 billion
Bear Stearns $3.2 billion
Deutsche Bank $3.2 billion
Bank of America $3.0 billion
Barclays $2.6 billion
Royal Bank of Scotland $2.6 billion
IKB $2.6 billion
Societe Generale $2.0 billion
Freddie Mac $2.0 billion
Wachovia $1.1 billion
Credit Suisse HASSAN AL BANNA $1.0 billion
Red Marker - 1991 to 1994 - Congress
Green Marker - 1995 to 1997 - United Front
Blue Marker - 1998 to 2003 - BJP
Red Marker - 2004 to 2008 - Congress
HASSAN AL BANNA
Growth drivers.
Productivity in retail industry.
India retail - stats

HASSAN AL BANNA
 The Growth Drivers
 Demography Dynamics: Approximately 60 % of
Indian population below 30 years of age.
 Double Incomes: Increasing instances of Double
Incomes in most families coupled with the rise in
spending power.
 Potential for Investment: The total estimated

Investment Opportunity in the retail sector is

around US$ 5-6 Billion in the Next five years.

HASSAN AL BANNA
 Sectors with High Growth Potential: Certain
segments that promise a high growth are o Food
and Grocery (91 %) Clothing (55 %) Furniture
and Fixtures (27 %) Pharmacy (27 %) o
Durables, Footwear & Leather, Watch &
Jewellery (18 %).
 Fastest Growing Formats: Some of the formats

that offer good growth potential are: Specialty

and Super Market (45 %) Hyper Market (36 %)
Discount stores (27 %) Department Stores (18
%) Convenience Stores and E-Retailing (9 %).

HASSAN AL BANNA
 Productivity in retail
Retail
industry
2005 2006 2007
in India
2008 2009 2010
Trade
Retail Sales 15,409 17,360 19,465 21,715 24,215 27,107
(Rs Bn)
Retail sales 349.4 385.8 421.3 467.0 516.3 564.7
(US$ Bn)
Retail Sales 6.0 7.5 7.7 6.9 6.8 7.3
volume
growth (%)

Retail sales 13.6 10.4 9.2 10.8 10.6 9.4

US$ Value
growth (%)

HASSAN AL BANNA
India retail : 2006
Retail Segments India Retail Value Organized Retail % Organized in
(Rs.Crore) (Rs.Crore) 2006

Clothing, Textiles 113,500 21,400 18.9

& Fashion
Accessories

Jewellery 60,200 1,680 2.8

Watches 3,950 1,800 45.6

Footwear 13,750 5,200 37.8

Health & Beauty 3,800 400 10.6

care services

Pharmaceuticals 42,200 1,100 2.6

HASSAN AL BANNA
Consumer 48,100 5,000 10.4
Durables, Home
Appliances/equip
ments
Mobile handsets. 21,650 1,740 8.0
Accessories &
Services
Furnishings, 40,650 3,700 9.1
Utensils,
Furniture-Home
& Office
Food & Grocery 743,900 5,800 0.8
Catering Services 57,000 3,940 6.9
(F & B)
Books, Music & 13,300 1,680 12.6
Gifts
Entertainment 38,000 1,560 4.1
US$ 270 Billion US$ 12.4 Billion
HASSAN AL BANNA
 Quick Stats of Indian
Retail
 Market size (total) 2006: US$ 300 bn/annum
 Market size (total) 2010: US$ 427 bn/annum
 Market size (total) 2015: US$ 637 bn/annum

 Market size (modern retail) 2006: US$ 9-12

bn/annum

HASSAN AL BANNA
 Annual rate of growth (modern retail): 35% .
 Penetration (modern retail) 2006: 3 to 4%.

 Penetration (modern retail) 2010: 10%.

 Number of retail outlets (total): 12 million.

 Market size (modern retail) 2011: US$ 60

bn/annum.

HASSAN AL BANNA
 Yardstick Situation in 04-05 Situation in 07-08
Value of retail sales Rs. 10,20,000 crore Rs 12,00,000 crore

Annual growth rate 5% 5.7%

Value of organized Rs 35,000 crore Rs 55,000 crore
market
Share of organized 3.4% 4.6%
market in the sector
Forecasts (after 5 Over Rs. 1,00,000 crore Rs. 2,00,000 crore
years) about size of
organized retail
market
Forecasts about Around 30% Around 40%
growth rate of
organized retail
market

HASSAN AL BANNA
Promoter/chairman/ Company /group Value of equity Business
family head holdings (Rs
crore)

Kishore Biyani & Pantaloon Retail 2,332.83 Retail

associates
Nikhil Chturvedi & Provogue(India) 213 Retail
family
K. Raheja & family Shoppers' Stop 1,285.40 Retail

Urvi Piramal & Piramyd Retail 276.78 Retail

family

HASSAN AL BANNA
Market.
Retail space.
Why Asia remains the leader.

HASSAN AL BANNA
 Market
 Investment
New Investment by 2011: US$ 30 bn
 Employment

No. of persons employed (total): 21 mn

No. of new jobs in next two years: 2 mn.
 Wealth

No. of dollar designated millionaires in

India(2006) 100,015

HASSAN AL BANNA
 Retail Space
 Typical space per outlet: 100 to 500 sqft.
 Space occupied (modern retail): 35 mn sqft.

 Operating Malls 2007: 114 (35 mn sqft.)

 New Malls under construction: 361 (117 mn sqft.)

 New space distribution: 65% (top 7 cities), 35% (tier

II & III cities)

 New space distribution (among top 7 cities): NCR

34%, Mumbai 23%, Rest 43%.

HASSAN AL BANNA
 Why Asia remains the
leader
 Asia leads the world in labor productivity growth at
3.4%.
 East Asia has rebounded strongly from its 1997-

1998 crisis, registering solid 3.6% productivity

growth since 1998.
 China continues to be a worldwide leader in labor

productivity growth, at 6.5% annually.

HASSAN AL BANNA
 India leads South Asia with 3.4% productivity growth
between 1995 and 2002.
 Japan experienced a significant acceleration in per

hour labor productivity growth in 2003, increasing

from 1.8% in 2002 to 2.9% in 2003.
 “Gains in East Asia and the Pacific, which account

for 42% of world employment, and South Asia, with

18% of world employment, are critical to future
productivity advances,”

HASSAN AL BANNA
HASSAN AL BANNA
 Critical areas to watch for significant improvement in
living standards are China, which has 28% of all the
world’s jobs, and India (15%).
 India’s productivity is growing at 3.5%.

 China and India will have to continue the reform

process, since their productivity levels are only 14%

and 9% of the U.S. productivity levels.

HASSAN AL BANNA
Retail updates

HASSAN AL BANNA
 KEEP YOURSELF UPDATED
Wal-Mart and Bharti in India deal

 The outlets will sell fruit and vegetables and other items.
 It plans to employ about 5,000 people selling groceries,
consumer goods, fruits and vegetables.
 The first Bharti Wal-Mart Private Limited cash-and-carry
store is set to open by the end of 2008.

HASSAN AL BANNA
Reliance Retail

Reliance Mart, the hypermarket format, Reliance Retail is

now set to launch a new format for Lifestyle shopping and
the first outlet is a toss-up between Bangalore and
Gurgaon.
The first lifestyle format will have stores close to 30,000
sq ft in size and will stock products across categories such
as books, music, toys, stationery, fragrances, sporting
goods, jewellery and watches.
Reliance Retail is keen to rollout new stores in West
Bengal - Reliance Delight.

HASSAN AL BANNA
Modern’ retail is poised to grow into a $450
billion business by 2015

 “Driving consumption across categories is

essential. We need to grow the basket-size per
customer.” — Peter Haden, Partner and Co-leader
(Retail practice), McKinsey & Company.

HASSAN AL BANNA
The Future Group

 The Future Group will focus on launching private labels

with high profit margins in segments like toothpaste,
shampoo, and butter amongst others.
 Big Bazaar, the hypermarket chain of Future Group, is
introducing Customer Advisory Boards (CABs) as a
measure for receiving valuable customer feedback.

HASSAN AL BANNA
Young Indians will drive growth of ‘modern’ retail
in India

 India Retail Report 2009, a recent study on retail

spending of Indian consumers, has estimated that the
spending will rise from Rs.13.30 lakh crore now to
Rs.18.10 lakh crore (US$280 billion to US$380 billion) by
2010.

HASSAN AL BANNA
 Miscellaneous Updates
 Costa Coffee plans to aggressively expand retail network
in India.
 Toy maker ‘Hanung’ announces seven-fold expansion of

retail network this fiscal.

 In West Bengal, leading retailers like the Future Group

and Spencer's Retail, are expanding and upgrading their

present stores in 2009. Others like Wills Lifestyle, Turtle
Ltd, and Bisk Farm, are planning to set up new stores,
particularly in the suburbs.

HASSAN AL BANNA
 Italian luxury fashion major ‘Diesel’ announces joint
venture with Reliance Brands.
 Shoppers Stop and Vishal decide to moderate

expansion plans as raising capital from markets

becomes difficult in current conditions.
 Retail companies are also developing and promoting

their in-house brands. The Future Group will be

targeting profits worth US$ 2.05 billion from its in-
house brands in FMCG, household consumer
durable and electronics and apparel categories by
2012.

HASSAN AL BANNA
 In partnership with the Future Group, Axiom Telecom
(a mobile retail company from West Asia) will be
forming a joint venture company called Future Axiom
Telecom Ltd. The 50:50 JV plans an initial investment
of around US$ 40 million, and targets setting up
1,500-outlets by the end of December 2009.
 Spencer's Retail will be establishing 300 additional

stores by 2010 with an investment of US$ 102.88

million. Presently, Spencer's has 700 stores, which
account for a retail space of 2.5 million, which will
increase by another 1.3 million sq ft by 2010.

HASSAN AL BANNA
Similarly, ITC's Wills Lifestyle and John Players plan to
expand their presence in tier II & III cities, increasing
their retail space around 15-20 per cent. Currently, there
are over 50 Wills Lifestyle stores in India.
Shopper's Stop is also planning to invest US$ 205.78
million for increasing its present store space of 1.3
million square feet to 2.7 million square feet over the
coming 3-4 years.
Tata Group's Trent, (which operates Westside), is
planning to add 8-10 stores every year to its present 31
store in India.

HASSAN AL BANNA
 Conclusion
Against the background of the first economic crisis of the
global era and the resulting uncertainty in many markets, it
is clear that retailers can no longer operate or think in
isolation. The 2009 Congress will take place in Barcelona
on 6-8 May 2009. With its reputation and influence growing
around the world it is set to continue to attract industry
leaders. World Retail Congress is the most influential and
highest profile gathering of the retail industry across all
sectors at global level.
Thus, it indicates that the show must go on.

HASSAN AL BANNA
HASSAN AL BANNA