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India is rated the fifth most attractive emerging retail market: a potential goldmine Favorable demographics Growth in income Increasing population of women Organized retailing in India has been largely an urban phenomenon with affluent classes and growing number of double-income households.
COMPANIES TAPPING WITH TREND : Companies using their own web portal or tie-sups with horizontal players like Rediff.com and Indiatimes.com to offer products on the web. Spencer's is also planning to set up 500 more stores by June 2014 with an investment of nearly US$ 125.89 million DLF plans to invest US$ 4.02 billion over four years to develop about 20 large shopping malls across the country IT is a tool that has been used by retailers ranging from Amazon.com to eBay to radically change buying behavior across the globe
Experimentation with formats : Ex. Quasi-mall, sub-urban discount stores, Cash and carry etc Unorganized retailing is getting organized: To meet the challenges of organized retailing such as large cineplexes, and malls, which are backed by the corporate house such as 'Ansals' and 'PVR the unorganized sector is getting organized. 25 stores in Delhi under the banner of Provision mart are joining hands to combine monthly buying. food Bazaar and E-food mart formed which are aggregations of Kiranas. Emergence of discount stores: They are expected to spearhead the organized retailing revolution. Stores trying to emulate the model of Wal-Mart. Ex. Big Bazaar, Bombay Bazaar, esyday
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Size of Industry
Manufacturers opening their own outlets
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Pure play Retailers, realizing the potential start to test waters,
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Large Investment Commitments by large Indian corporate
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More than 25-30 retail businesses with Revenues in excess of US $ 1 Billion Specialty Formats based on finer segmentation of the market Private brands getting established
Pre 1995
1995 to 2005
2005 to 2010
2010 Onwards
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position consecutively for the second year. The report sees Indian retail Industry to
grow exponentially over next few years. The ranking has been done for 30 upcoming global economies. It is based on 4 broad categories namely - Country Risk, Market
Attractiveness, Market Saturation and Time pressure for a new entrant to start retail
business Organized retail will create 1.6 million jobs in the next 5 years.
Conti.
The huge Indian middle class consumer are now the blue eyed segment for biggies like Bharti, Wal-Mart, Reliance and loads of others, in race to capture their pie in Indian Retail Market. The modern retail Industry in BRICs (Brazil, Russia, India and China) is seen as having the maximum potential on growth worldwide. It grew by almost 30% in India and 13% in China and Russia last year. Organized retail now accounts for only 5% of Indias retail business with an estimated 12 million mom-and-pop stores garnering the bulk of the trade. By 2015, organized retail is expected to have a share of 14-18 percent of the business. There will be a huge growth in the number of people with increasing disposable incomes.
What Is FDI?
Foreign direct investment (FDI) is direct investment into production in a country by a company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country. FDI in India are approved through two routes: Approval by RBI Foreign Investment Promotion Board (FIPB).
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It means , FDI in multi brand retail implies that a retail store with a foreign investment can sell multiple brands under one roof. The present FDI regime also allows 100 per cent FDI in wholesale cash and carry.
The minimum capital required for FDI is $100 million out of which 50 per cent should go for back-end infrastructure development. 30 per cent of goods and commodities should be purchased from
local suppliers.
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FDI in MultiBrand Retail The government has also not defined the term Multi Brand. FDI in Multi Brand retail implies that a retail store with a foreign investment can sell multiple brands under one roof.
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Spur competition
Lowering inflation
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Investment in Technology
Benefits to government
Benefits
Generate huge employment
Unfair competition and ultimately result in large-scale exit of domestic retailers Large scale displacement of persons employed in the retail sector & No other sector to absorb employment. In the 2011-2012 Union Budget, the government virtually allowed FDI in farm warehousing and cold chains and the result was the emergence of clones of Indian companies registering them-selves massively in the farm sector. This is a threat to the 72 crore people in farm sector whose livelihood might get endangered with the entry of global players.
FROM VIEW of unorganized market, the kiranas might not be able to bear the price pres-sure exerted by foreign retailers if they start leveraging on their global sourcing capabilities and start slashing their prices
Indian Council of Research in International Economic Relations (ICRIER) is conducting a study: The Impact of Organized Retailing on the Unorganized Retail Sector. This was commissioned in March 2007.
This study would cover the effect of organized retailing on small retailers and vendors in the unorganized sector keeping in mind the likely growth in the overall market and effect on employment. ICRIERs Director has said: The survey will be done among consumers, retailers, and malls across India in two phases.
In the first phase, the study will be conducted in 20 cities that already have malls. In the second phase, ICRIER will study the response of small shops and consumers in cities where organized retail is at an early stage. For conducting the studies, ICRIER will be taking the help of Development and Research Services and Technopak. This retail survey is the result of a letter sent by UPA Chairperson Sonia Gandhis to the Prime Minister. She had expressed concern over the impact of multinational retail chains on small retailers.
Conclusion
It can be concluded that FDI in retail sector in India will have mixed implication since After globalization India is the one of the