FOOD RETAILING IN INDIA

DR. R. K. Patel

WHAT IS RETAILING?

Retailing a set of business activities that adds value to the products and services sold to consumers for their personal or family use. A retailer is a business that sells products and/or services to consumers for personal or family use.

RETAILING IN INDIA

Emergence of modern retail formats

Increased pressure on opening up FDI in retail sector

Rapid Evolution of New-age Young Indian Consumers Rapidly increasing middle class Rising Incomes levels Increased Awareness Level among Consumers Exposure to International Brands Retail Space is no more a constraint for growth
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INDIAN RETAIL SCENARIO

Total Private Consumption Expenditure in India 375 Billion USD Retail Sale 205 Billion USD (55%) Organized Retail 6.2 Billion USD (3%) Retailing 35% of GDP Outlet Estimates Over 12 Million

Format Only 4% larger than 500 sq.ft.

Second Largest Employer after Agriculture
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THE RETAIL LIFE CYCLE

SALES

Maturity Decline

Growth Innovation

Profit

TIME
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CLASSIFICATION OF RETAIL STORES

Classification of Retail Stores

Store Based Retailing

Non-Store Retailing

Form of Ownership
Independent retailer Chain retailer Franchise Leased departments Consumer co-operatives

Merchandise offered
Convenience stores Supermarkets Hypermarkets Speciality stores Departmental stores Off price retailers Factory outlets Catalogue showrooms

Direct selling Mail order Tele marketing Automated Vending

RETAILING FORMATS IN INDIA

Malls

Specialty Stores
Discount Stores Department Stores Hypermarts/Supermarkets Convenience Stores MBOs
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ORGANIZED RETAIL
The Indian organized retail industry is valued at about $300 billion and is expected to grow to $427 billion in 2010 and $637 billion in 2015. Retail Market India today is the second fastest growing economy of the world after China. In organised retail the front liners like shop floor executives, sales executives etc are in great demand. Organised trade in India is highly under-developed as compared with other emerging markets in Asia, Latin America and Eastern Europe and developed markets like 8 the US.

ORGANISED RETAIL MARKET IN INDIA (RS. CR.)

FOOD RETAILING
Food retailing has come of age Food items were sold in small road side grocer shops & mandis, now being sold through supermarket stores. Shopping for groceries is no longer a strenuous and uncomfortable affair. Food & beverages is the major segment, in organized Retail of India, worth Rs 8,97,000 crore. Food retail has surpassed the dominating apparel and accessories sector. From simple trading activity, food retailing is now heading to the status of an industry.

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ORGANIZED FOOD RETAIL CHAIN

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THE BUSINESS ENVIRONMENT AND ITS INFLUENCE ON FORMATS

1. The cost and availability of real estate

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2. Regulatory environment

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3. Development of distribution in infrastructure

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4..State of technology

KEY PLAYERS IN INDIAN FOOD RETAIL SECTOR

Reliance fresh Subhiksha* Food bazaar More retail

International player
Wall mart- Super center

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RELIANCE FRESH

Type

Supermarket

Founded
Headquarters

30 October 2006
Mumbai, India

Key people

Mukesh Ambani, CEO

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Reliance Fresh is the convenience store format Headed by MUKESH AMBANI. Reliance plans to invest in excess of Rs 25000 crores in the next 4 years in their retail division. The company already has in excess of 560 reliance fresh outlets across the country. Reliance Fresh store is approximately 3000-4000 square. feet and caters to a catchment area of 1-2 km.

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VISION
To create a blend of a typical Indian Bazaar andInternational Supermarket atmosphere with theobjective of giving the customer, all the advantages ofQuality, Range and Price associated with large format stores and also the comfort of being able to touch andfeel the products.

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SUBHIKSHA
Type Founded No. of locations Key people Industry Employees Discount department store Chennai, India (1997) 1000 stores R. Subramanian Retail 25,000
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Subhiksha is an Indian retail chain with more than 1400 outlets selling groceries, fruits, vegetables, medicines and mobile phones. It was started and is managed by R. Subramanian Subhiksha plans to open 1000 outlets by December 2008. plans to invest Rs.500 crore to increase the number of outlets to 2000 across the country by 2009

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FOOD BAZAAR
Food Bazaar, the supermarket variant of future group. Has adopted the 'negotiated and predetermined' model to source vegetables and fruit from farmers across states. The company will use the model to procure potatoes from farmers in Uttar Pradesh where the quantity and quality of the produce is predetermined. The company decides the price after the harvest to give maximum benefit to the farmer.

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35+ stores; pan Indian format Bhubaneshwar, Nagpur, Nashik, Durgapur.Sangli Simple, Indian model Minimum habit change for the customers Use small entrepreneurs to the hilt, for category management Largest Food Retailer But just a small spec in the market Shooting for Rs 1000 Cr this year; Rs 2000 Cr next year

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MORE RETAIL STORE

Type Founded No. of locations Department store 2007 40-50(Mumbai)

Industry

Retail
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The more. chain of supermarkets, are bright and clean stores, at convenient locations with layouts that allow ease of navigation. The product display is well organised and facilitates ease of choice. The stores have been designed by Fitch, the leading international retail design firm.

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WAL-MART SUPERCENTER

The number of non-traditional retail outlets,such as warehouse clubs and discount mass merchandisers,has increased substantially in the pastdecade. Traditional supermarkets are facing seriouscompetition from these retail outlets because nontraditionalretailers with low-operating margins areable to provide low-price appeal to consumers. supercenters,ranging in size from 100,000-200,000 square feet.

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COMPETITIVE ANALYSIS (FOOD RETAIL)

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SUBHIKSHA

Subhiksha is an Indian retail chain with more than 1400 outlets selling groceries, fruits, vegetables, medicines and mobile phones. Subhiksha plans to open 1000 outlets by December 2008. Plans to invest Rs.500 crore to increase the number of outlets to 2000 across the country by 2009.

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Subhiksha has seen a considerable growth by offering goods at cheaper rates and there by increasing its customer base. It is also dubbed as India's largest retail chain.vision to deliver consistently better value to Indian consumers.

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Subhiksha now has the pan Indian presence with stores across Delhi, UP, Punjab, Hariyana, Gujarat, Maharashtra, AP, Karnataka and TN. It has recently commenced operation in Kerala also.

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Thinking: Bringing in a model that is Indian, capable of supporting the middle class of India.

A business model from India is superior to a business model imported from the West. We genuinely believe that through efficiency, we are helping the consumers save more.

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RELIANCE FRESH
Reliance

Fresh is the convenience store format which forms part of the retail business of Reliance industries of india. Ambani Reliance plans to invest in excess of Rs 25000 crores in the next 4 years in their retail division. would provide direct employment to 5 lakh young Indians and indirect job opportunities to a million people, according to the company.

Mukesh

Stores

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The company also has plans to train students and housewives in customer care and quality services for parttime jobs. Company-owned stores currently totals just $8 billion in India.

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The MORE chain of supermarkets, are bright and clean stores, at convenient locations with layouts that allow ease of navigation. MORE is the answer to the shopping needs of the Indian housewife who wants a modern and convenient option in her neighbourhood.
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MORE also has a range of products from its own stable available across value, premium and select ranges. The Rs 9,000-crore pan-Indian plan would have neighbourhood supermarkets catering to daily and weekly household shopping needs of customers.

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Food Bazaar supermarket variant of Pantaloon Retail Ltd, has adopted the predetermined' model to source vegetables and fruit from farmers. Almost 20% of the cost is saved if the produce is procured directly from the farmers.

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Kishore Biyani-run retail major, Pantaloon, is awaiting amendments in the Agriculture Produce Marketing Committee (APMC) Act in different states to source its produce directly from the farmers.

The floor area for the stores will range from 5,000 sqft to 20,000 sqft.

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Of the 8,000 stock keeping units available across the stores, 10% constitute the farm fresh segment, while the international standard is around 12%. The company wants to push the former to 15% in the next three years.

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FUTURE OF FOOD RETAILING

Innovation on Retail format by targeting specific customer segments and serving their needs better e.g. working women, single office goers, etc

by changing the product mix e.g. entirely private label stores, exclusively fresh produce stores
by offering new forms of convenience and wider range to the customer e.g. tele retail and internet retail
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Technological Innovations Self-scan checkouts

Using RFID tags Web-enabled POS systems, e-SCM systems, eProcurement systems and warehouse management systems Use of cutting edge analytics

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THANK YOU..

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