Retailing, in a layman’s language involves the procurement of varied products in large quantities from various sources/producers and their sales in small lot for direct consumption to the purchaser. Retailing can broadly be classified into: organised and unorganised retail. Unorganised retailing refers to the traditional form of retailing with the retail outlets situated near the residential are as while organised retailing refers to the modern form of retailing with trading activities undertaken by licensed retailers generally located in commercial establishments/high-street areas.
Globally, the retail industry has grown at a brisk pace with a Compounded Annual Growth Rate (CAGR) of 7.77% during the period 2001-2006. The growing expanse of the top global retailers has ensured globalisation of the industry; however the opportunity for growth of organised retail is immense in countries such as India, S. Korea, Vietnam etc. where organised retailing is still at a nascent stage.
The Indian retail industry has witnessed a massive transition during the last few decades. The Indian retail has grown at a CAGR of 11.2% during the period FY04-FY07, with food and grocery accounting for the major share. Despite the industry being dominated by the unorganised retailers, the organised retailing revenues have soared at a CAGR of 19.5% during the period FY04-FY07. The apparel & footwear segment occupies the major share in the organised retail pie.
The Indian retail industry has strong linkages with the economic growth and development of the economy. It is primarily characterised by its hierarchical growth structure, high working capital requirements etc. The factors such as rising urbanisation, growing consumer class, growing per capita expenditure, greater interest evinced by the Venture capitalists / Private equity firms in the industry etc. have been driving the growth of organised retail. The growth of modern retailing has led to the emergence of varied formats such as Departmental stores, Supermarkets etc. In addition, few other formats such as rural retailing, E-retailing, luxury retailing etc. too have found favours with the Indian retailers. Each format being distinct from the other, the viability of their operations depends upon various factors such as average footfalls, sales per sq.ft etc. However the numerous licensing requirements as compared to other countries have proved to be a bottleneck in the growth of Indian retailing.
With subdued consumer sentiments as witnessed during the latter half of FY09, CARE Research expects the Indian Retail industry’s performance to remain steady during FY09. However considering the immense potentialities, the industry would witness robust performance in the long run. The report on ‘Indian Retail Industry’ unwinds answers to varied queries related to retailing (both organised and unorganised). The report comprises of three sections. Section I of the report provides a general overview of the industry. Section II deals with the nuances of organised retailing in India. Section III provides an overview of the Top-5 industry players, which is followed by a list of Annexures covering extensive industry data.
Section I Industry Overview
* The initial stages of the report deals with the history of global retailing with a special focus on the major global players driving the retail growth
* The evolution of the Indian retail industry together with the contribution of varied segments such as food & grocery, apparel & footwear etc, have been dealt in detail
* The characteristics inherent to the industry have been described in detail by bringing out the changes in the various socio-economic factors affecting the industry
* The factors propelling the industry’s growth (both demand-side and supply-side) have been covered under the head Growth Drivers
Section II Organised Retailing – An in-depth analysis
* This section explores the growth of organised retailing in India particularly with respect to the emergence of varied retail formats such as Supermarket, Hypermarket etc.
* The viability of these modern formats together with the determinants of such viability has been discussed at length. This section seeks to explore answers to questions such as:
What value propositions can different formats offer? Which is the most viable format for the retailer? What are the determinants of such viability? Which formats are the emerging
ones?
* The report also lays emphasis on the emerging retailing formats such as e-retailing, luxury retailing etc that would form the flavour of the future for the modern retailers
* A comprehensive analysis of the major expenditure heads of the leading players in the industry has been presented in the report for the period spanning FY06-FY08
* The various licensing and regulatory requirements together with the intricacies relating to the same have been dealt in detail
* CARE Research also seeks to unwind the mysteries surrounding the long-raging debate on whether the growth of organised retailing in India would lead to the death of mom-&-
pop stores. Through detailed analysis backed by conclusive evidences, CARE Research recommends the optimum retailing mix in the long run
* Modern retail may just be assumed as a business of purchase and sale of goods. However the modern retailers have to face many harsh realities on the growth path. The challenges to the modern retailers have been covered in detail
* The challenges as faced by the organised retailers further goes a long way in describing the harsh realities behind modern retail
* To estimate the size of the Indian retail industry and the penetration levels of organised retail in the urban and rural Indian markets for the period FY08-FY11, CARE Research has evolved out an industry model incorporating three different scenarios i.e. Optimistic, Most Likely and Pessimistic, to present a holistic view of the industry in light of the varied future developments
Section III Overview of Indian players
* This section focuses on the profile of the Top-5 players in the Indian retail industry namely Pantaloon Retail, Shoppers Stop, Vishal Retail, Koutons Retail and Trent. The profile includes a brief business overview, corporate structure analysis, business model analysis in terms of various formats, size, along with their strengths and weaknesses
* This section further elaborately covers the financial aspects – The revenue and the cost structure gets highlighted through income statement analysis. Working capital requirements, growth of asset base and financial structure are anlaysed using a combination of balance sheet, cash flows and ratio analysis as a tool. Further emphasis has been laid on drawing comparison between these players through pictorial analysis
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