Presentation by :Presentation by Pratik Bhat Amogh Deshmukh Rajendra Deshpande Lovelyn Gajaria Satish Nair


Retail Sector developments (Wal-Mart) In India :Retail Sector developments (Wal-Mart) In India Present scenario & Strategies for small retailers


Back Ground – Key Points :Back Ground – Key Points India is the Second Largest Retail Market India is Slowly Opening its Retail Sector for FDI Huge Opportunities exist for Global Retailing Giants in India Population > 1.2 Billion!! Per capita income $ 3300 Economy Growth Rate 8.5%


Back Ground – Retail Sector :Back Ground – Retail Sector Highly Fragmented Retail sector!! India has 30 Million Retailers! Retail sector is the Second Largest Employer Organized Retail trade is $ 250 Billion Unorganized Retail trade is estimated at $600+ billion


Retail Sector Analysis :Retail Sector Analysis Most Retailers are Mom-Pop operation Large Retail Chains are few and mainly Concentrated in 6 Cities – Delhi, Mumbai, Bangalore, Kolkotta, Chennai & Hyderabad. In addition to small retailers, there are Street Vendors, Push cart vendors Retail sector employs about 40 Million people


Government Rules & Regulation :Government Rules & Regulation Foreign Investment Promotion Board in 1997 set up rules that govern Foreign Investments in Retail Sector which categorized foreign companies into 3 broad types: Companies that set up domestic manufacturing facilities and sold products manufactured domestically. Companies that came in to trade prior to the 1997 norms. Companies that came in to trade after the 1997 norms were adopted.


Policy Favors Domestic Manufacturing :Policy Favors Domestic Manufacturing No restrictions on the sale of products made in India. Sony, LG, Samsung & Phillips etc, manufacture and sell products in India. They also import and sell other high-tech products like laser printers and photocopiers etc Provided that current manufacturing techniques and costs do not yet permit them to manufacture these items domestically. And they undertake to do so in the near future.


Rules for Global Retailers :Rules for Global Retailers Global Retailers planning to setup shop in India need to: Setup Wholly Owned Subsidiaries in India Sell only to Whole Sellers Cannot sell to Retail Customers Whole Sellers are defined as “Government certified Whole Seller who holds a Sales Tax registration Number”


Regional Government Rules :Regional Government Rules In Addition to the Federal Rules, there are Local rules which govern the location & size of Retail Stores. Retail Stores cannot be in City Centers Land Availability conditions imply that New Mega retail stores to be setup at the outskirts of the city. Must get permission from Local municipality or City Corporations


Political Battle – Contd. :Political Battle – Contd. Foreign Retailers is now an Election Issue! Federation of Associations of Maharashtra state (FAM), a state-level organization of small traders, Communist Party of India (Marxist) and Swadeshi Jagaran Manch (SJM) – wing of the ruling party are opposed to Foreign Retailers Confederation of Indian Industry (CII) supports FAM on this issue


Long Term Outlook :Long Term Outlook India is an attractive Market Retail giants cannot afford to Ignore Rules & Regulations will change with time to level the playing field Wal-Mart’s “No Union” policy may be challenged Indian Retailers will be tough competitors Current opposition is similar to those faced by Wal-Mart in many US towns and Cities Companies must not read too much about Metro’s woes (the German retail giant), These are part of business environment


Strategies for Small retailers :Strategies for Small retailers Upgrade The retailing environment (the store) Assortment Customer service Customer Relationships


Strategies for Small retailers :Strategies for Small retailers Customer Relationships Eg HLL Supervalue stores & further upgradation to self service stores Four `Super Value' stores have been converted into self-service stores in Delhi. (HLL had earlier tied up with grocery stores to convert them into Super Value stores offering freebies and promotional activities.) These self-service stores offer shoppers the advantage of touch-and-feel like in modern trade stores and help make the shopping experience "more personalised and fulfilling."


Strategies for Small retailers :Strategies for Small retailers Unite To reap the benefits of scale Eg. Maharashtra pharmacists & druggist association


Competitive Landscape & Conclusion :Competitive Landscape & Conclusion Small retailer may look unsophisticated and cash strapped but … Small retailers will be tough competition Small Independent retailers are a part of Indian Culture Have better relationships with customers Often offer better service than giant retailers Unorganized retail sector has hidden tax benefits (many evade taxes or pay minimum taxes)