Key

Drivers
of
Growth
Key Drivers of Growth
in
in Indian
Indian Retail
Retail

Presented By
Presented By

Pinaki
Pinaki
Basu
Basu
200940

Introduction
An Overview of Indian Retail Industry
Size of Indian Retail Industry :
$ 390 Billion or 18,10,000 crore
Compounded Annual Growth Rate : 11.74%
Value in Billion
Year
2004
2005
2006
2007
2008
2009
2010
Source: F & R Research

Organised
Unorganised
280
9020
375
9925
550
11450
783
12517
1120
13680
1600
14800
2300
15800
CAGR 2004-2010 (%)

Total
9300
10300
12000
13300
14800
16400
18100
11.74

Growth of Indian Retail - Total

20000

18,100

15000

Billion
10000 9020
9,300

16,400
15800
14,800
14800
13680
13,300
12517
12,000
11450
10,300
9925

Organize d

Unorganize d

Total

5000

280
0

2004

375
2005

Source: Source: F & R Research

783

550
2006

2007

Year

1120
2008

1600
2009

2300

2010

Organised Retail Growth in India

2500
2000
1500

in Billion
1000

500
0
2004

2005

2006

2007

2008

2009

Year

Source: Source: F & R Research

CAGR :
45.74%

2010

Key Drivers

Consumer or Demand-Side Drivers

Personal Consumption as a
percentage of GDP
Only second to Vietnam in Asia
Fourth in the world
China (~35%), Singapore (~45%), Hong Kong
(~50%),
South Korea (~46%) in 2007

Consumer or Demand-Side Drivers

Population as a Growth
Driver Projected Total Population
Projected Population

1,350,000
1,300,000
1,250,000
1,200,000
1,150,000
1,100,000
1,050,000
1,000,000

Source: censusindia.gov.in

Year

Consumer or Demand-Side Drivers

Population as a Growth
Driver
Adoption of Nuclear Family Culture
Average Household Size in 1991 : 5.57
Average Household Size in 2001 : 5.36
Average Household Size in 2011 : 5.02
(Expected)

Source:
censusindia.gov.in

Consumer or Demand-Side Drivers

Population as a Growth Driver
Baby Boomer Effect

Steep Growth in Earning Population (15-60 yrs)

335 million people (54 % of total population) in 1975
593 million people (58.3% of total population) in 2000
Growth in Earning Population over 25 yrs: 77%
( CAGR of 2.3%)
Growth in Indian Population over 25 yrs: 64%
(CAGR of 2%)
782 million people (62.8% of total population) in 2015
(Expected)

Source: censusindia.gov.in

Consumer or Demand-Side Drivers

Population as a Growth
Driver
Growing Working Women
Population
Working women can spend 1.3 times more than
housewives
Working women in 1991: 22%
Working women in 2001: 26%

Source: censusindia.gov.in

Consumer or Demand-Side Drivers

Population as a Growth
Driver
Growth in Urban Population
Urbanization has increased at a rate of 2.7
percent from 1991-2001
Urban population 2000 : 28.1 crore
Expected to grow at 2.4%

Source: censusindia.gov.in

Consumer or Demand-Side Drivers

Plastic Money Becoming a

Greater Pie of Credit
India is the second fastest growing Financial
Cards market in the Asia - Pacific region.
Growth at 30-35% p.a. from 27mn cards in 2007.
Credit Card Sales: 1.2% in 2008
Credit Card Sales: 1.4% in 2010
(Expected)

Source: Euro Monitor

(www.euromonitor.com)

Consumer or Demand-Side Drivers

Internet Driving Awareness

and Online Purchases
Internet Users in India
100,000,000
80,000,000
60,000,000
No. Of People

40,000,000
20,000,000
0

Source: Internet World Stats, Angel

Research

Retailer or Supply-Side Drivers

Increased Investments in Retail
Organised Retail will possibly touch 2300 bn in 2010

Funds through Private Equity, IPO route and infusion of

funds through warrants

Allow organised players in Retail to expand

Source: Ernst & Young (www.ey.com)

Retailer or Supply-Side Drivers

Increased Investments in Retail
At an average investment of 3,000 per sq. ft. by
Retailers, these investments would translate to 750
mn sq. ft. of Organised Retail space by FY2010

All key Retailers in India have chalked

substantial investments over next 3-4
fuel their expansion plans.
Source: Ernst & Young (www.ey.com)

out
years to

Retailer or Supply-Side Drivers

Increased Investments in Retail
Pantaloon is expected to invest around 6,000 cr
over the next four years to fuel its three-fold
expansion plan and take its total Retail space to
26mn sq. ft. by FY2012.

Vishal Retail is expected to invest 3,000cr to

fuel its ambitious five-fold expansion plan to
take its total Retail space to 10mn sq. ft. by
FY2011.
Source: Ernst & Young (www.ey.com)

Retailer or Supply-Side Drivers

Tier- II & III cities to fuel

future growth of Modern
Retail
The Top-784 cities in India constitute about 26%
of population
They contribute 35% to Total Retail Sales.
Tier- II and III cities account for 18% of the overall
population
They contribute 22% to the Total Retail sales.

Retailer or Supply-Side Drivers

Shortened Supply Chain

benefits consumers
A Traditional supply chain in India
comprises 5-6 levels
Two major disadvantages:
Cost of the product increases
Increase in shrinkage

Traditional v/s Modern supply chain

Company /
Manufacture
r

Distributor

Buying
Agent
Back
End

5%
Commissio
n for
Buying
Agents

5%
Margins
for
Distributor
s

Franchisees

Company
owned
outlets /
large
Front organized
retailers
End

30-32%
Margins
for
company
owned
outlets/
large
retailers

30%
Margins
for
Franchisee
s

Consumers

Multi-Brand
Outlets
35%
Margins
for MultiBrand
Outlet
Retailers

Traditional v/s Modern supply chain

Back
End

Front
End

Company /
Manufactu
rer
38-40%
Margins for
Retailers

Retaile
rs

Consum
ers

Thank You