Retail Overview

1. Retail Overview

2. Retailing : An overview Evolution of Indian retail Retail Categories The Changing Indian Consumer Retail in India - Today Information Technology in Retail

3. What is Retailing? Retailing involves selling products and services to consumers for their personal or family use.  • Department stores, like Burdines and Macy's, • discount stores like Wal-Mart and K-Mart, and • specialty stores like The Gap, are all examples of retail stores.  Service providers, like dentists, hotels, theatres and hair salons On-line stores, like Amazon.com, are also retailers. Many businesses, like Home Depot, are both wholesalers and retailers because they sell to consumers and building contractors.  Other businesses, like The Limited, are both manufactures and retailers.  Retail is derived from the French word retaillier, meaning to cut a piece off or to break bulk.

4. Why is Retailing Important? Final link between consumers and manufacturers, retailers are a vital part of the business world.  Retailers add value to products by making it easier for manufactures to sell and consumers to buy.  By bringing multitudes of manufacturers and consumers together at a single point, retailers make it possible for products to be sold, and, consequently, business to be done.  Retailers also provide services that make it less risky and more fun to buy products.  They have salespeople on hand who can answer questions, may offer credit, and display products so that consumers know what is available and can see it before buying.  In addition, retailers may provide many extra services, from personal shopping to gift wrapping to delivery, that increase the value of products and services to consumers. Manufacturer Distributors/Wholesalers Retailers

5. Retailing : An overview Evolution of Indian retail Retail Categories The Changing Indian Consumer Retail in India - Today Information Technology in Retail

6. Evolution of Indian retail Modern Formats/ International Historic/Rural Reach Traditional/Pervasive Reach Government Supported Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls PDS Outlets Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas Weekly Markets Village Fairs Melas Source of Entertainment Availability/ Low Costs / Distribution Shopping Experience/Efficiency Neighborhood Stores/Convenience

7. Retailing sector is the second largest employer in the country with almost over 12 million retail outlets in India and only 4% of them being larger than 500 square feet in size. Although retailing in India is fairly fragmented, organized retailing is gaining momentum rapidly growing at almost 25-30% per annum and is forecasted to touch a figure of Rs I,50,000 crore by 2010. The economy is projected to grow at 8.1% in 2005-2006 having grown at a steady pace of around 6% over the last 10 years. Organized retailers are the contemporary formats by which shoppers have the edge of a world class shopping experience. Fine examples of these formats are Pantaloon, Reliance, FabMal,Shoppers Stop and Trent. Organized retail may broadly be classified into the following formats: Malls. Hypermarkets. MBO’s. Multi Brand outlets, also known as Category Killers, Super Markets. Discount Stores. Convenience Stores. Departmental Store. Exclusive Store. Specialty Store. India

8. Evolution of Indian retail • Informal retailing Sector • Typically small retailers. • Evasion of taxes • Difficulty in enforcing tax collection mechanisms • No monitoring of labor laws • Formal Retailing Sector • Typically large retailers • Greater enforcement of taxation mechanisms • High level of labor usage monitoring Indian retail

9. Retailing : An overview Evolution of Indian retail Retail Categories The Changing Indian Consumer Retail in India - Today Information Technology in Retail

10. Driven by Formats • Multiple Formats being developed simultaneously Super Markets Department Stores Hypermarkets Fashion Furniture and Furnishings Pharmacy, Health & Beauty Food Books and Music

11. Categories of Indian retail • Corporate Houses • Tatas: Tata Trent • RPG group: Food World, Health and Glow, etc • ITC: Wills Life Style • Rahejas(ShoppersStop), Hiranandani(Haiko), DLF(DT cinemas) etc. • Dedicated brand outlets • Nike, Reebok, Zodiac etc • Multi-brand outlets • Vijay Sales, Viveks etc • Manufacturers/ Exporters • Pantaloons, Bata, Weekender Indian retail

12. Classifying Indian retail • Modern Format retailers • Supermarkets (Foodworld) • Hypermarkets (Big Bazaar) • Department Stores (S Stop) • Specialty Chains (Ikea) • Company Owned Company Operated • Traditional Format Retailers • Kiranas: Traditional Mom and Pop Stores • Kiosks • Street Markets • Exclusive /Multiple Brand Outlets Indian retail

13. Large Indian retailers • Hypermarket • Big Bazaar • Giants • Shoprite • Star • Department store • Lifestyle • Pantaloons • Piramyds • Shoppers Stop • Trent • Entertainment • Fame Adlabs • Fun Republic • Inox • PVR Indian retailers

14. Retail Types • department stores • discount stores • variety stores • clothing retailers • specialty retailers • convenience stores • grocery stores • drug stores • home furnishings retailers • consumer electronics retailers • multiplexes • some e-commerce businesses (B2C) • direct sales

15. Hotel and Motel Grocery Stores, Conventional and Apparel and Soft Specialty Food National Chain Lines: Casino Hotels Stores, and Department Apparel and Beverage Stores Stores Accessories, Theaters, Pharmacies and Cosmetics, Beauty Discount or Mass Amusement and Drug Stores Supplies, Perfume, Merchandising Theme Parks, Health and Personal Convenience/Gas Stores Stadiums, Care Stores Museums, Cruise Warehouse Clubs Building Material and Lines, etc. and Superstores Garden/Farm Equipment and Supply Dealers Hard Lines: Automotive, Tire, Furniture, Electronics, Appliance, Optical, Sporting Goods, Hobby, Books, Music, and Miscellaneous Stores Industry Taxonomy Retail and Hospitality General Lodging, Gaming Food & Drug Specialty Retail Foodservice Merchandise & Entertainment Quick Service Restaurants (QSR) Full Service Restaurants (Bars, Casual Dining Fine Dining) On-Site

16. Retailing : An overview Evolution of Indian retail Retail Categories The Changing Indian Consumer Retail in India - Today Information Technology in Retail

17. The changing Indian consumer • Greater per capita income • Increase in disposable income of middle class households • 21.8%* growth in real disposable income in ’01-’05. • Growing high and middle income population • Growing at a pace of over 10%* per annum over last decade • Affordability growth • Falling interest rates • Easier consumer credit • Greater variety and quality at all price points Indian consumer †From Euromonitor Retail Survey

18. The changing Indian consumer • The urban consumer • Getting exposed to international lifestyles • Inclined to acquiring asset • More discerning and demanding than ever • No longer need-based shopping • Shopping is a family experience • Changing Mindset • Increasing tendency to spend • Post Liberalization children coming of age • 100 mn 17-21 year olds*. Tend to spend freely. • Greater levels of education Indian consumer *Data from NCAER

19. Positively Impacting the market scenario • Home ownership on the rise with 1.5 Mnnew homes added annually • India is one of the world’s fastest growing telecom market with 47 Mn subscribers; 2 Mn new subscribers added every month for Mobile telephones • Credit cardholder base to triple by 2008 from current 10 Mn users • Growth of 32% in Car sales, increasing number of families with more than one car • Consumer Durables sector growing at 10-15% every year

20. Retailing : An overview Evolution of Indian retail Retail Categories The Changing Indian Consumer Retail in India - Today Information Technology in Retail

21. Huge Developments in India Retail In India Retailing sector is the second largest employer in the country with almost over 12 million retail outlets in India and only 4% of them being larger than 500 square feet in size. Although retailing in India is fairly fragmented, organized retailing is gaining momentum rapidly growing at almost 25-30% per annum and is forecasted to touch a figure of Rs 1,00,000 crore by 2010.

22. Organized Retail • The Organized Retail in India is at 4% and pegged at reaching 9% by the of 2010. Organized Retail across different categories

23. Mall Developments in India • The boom in the retail sector is also associated with the rise of mall all across the country. There are 220 mall project in the pipeline till 2007, 139 in the big 8 cities including the metros and 81 in other Tier II cities. • Real Estate major DLF Universal to invest over Rs 1,00,000 crore in next seven to 10 years in both its existing and new business ventures. As per available information, bulk of these investments would be made in the three new businesses – hospitality and infrastructure. • The Mumbai-based Surraaj Hotels and Resorts (SHR) is planning to invest around Rs 300 crore for setting up four luxury hotels across the country. The group, promoted by Mumbai-based hotelier Kamal Galani, plans to come up with a five-star hotel each in Pune, Bangalore, Hyderabad and Jaipur.

24. Tier 1 - Cities Tier 2 - Cities Market Potential Increasing in the Non-metros as well • Non-metros like Chandigarh, Jaipur, Ludhiana, Jalandhar, Pune and Amritsar are increasingly more receptive to cars, home theatres and other high-value consumables.

25. Retailing : An overview Evolution of Indian retail Retail Categories The Changing Indian Consumer Retail in India - Today Information Technology in Retail

26. Where are we coming from The Abacus: Precursor to the Cash Register • One of the earliest inventions for keeping track of commercial transactions is the abacus, an instrument that helps a person make arithmetic calculations. Invented over 4500 years ago in the mid-east, it was further developed by the Egyptians and Chinese into its present form.. The Cash drawer • By the middle of the 19th century, the cash drawer, with its dividers to hold bills and coins, was a common feature of retail establishments all over the world.

27. Where are we coming from The Cash register • The cash register was invented in 1879 by James Ritty, a saloonkeeper in Dayton, Ohio. He patented a machine with a mechanism similar to one he had seen count the revolutions of an ocean liner's propeller in its engine room. His "Incorruptible Cashier" (left) used metal taps with denominations pressed into them to indicate the amount of the sale. The Electronic Age 1980's – • By the 1980’s, cash registers were a combination of computers and scanners, acting as point-of-sale systems that sometimes where wired directly into accounting systems. During these recent decades, credit card capabilities changed as well.

28. Protocols: Loosely Coupled APIs: Tightly Coupled • Speech/Writing • Devices Waves Of Innovation • Wi-Fi/Broadband • Web Services • Trusted Computing Hardware • Digital Rights Management • XML/SOAP • HTTP/HTML • SMTP • Email Clients • Web Browsers • Mouse • GUI • LANs • PC Architecture • DOS • Spreadsheets • Word Processors Today PC Mid 80s Applications Late 80s-Mid 90s Internet Mid 90s Web Apps Mid 00s - . . .

29. Composition of the Domestic IT Market • The IT industry’s contribution to the Indian GDP has increased from approximately 1.4 percent in 1998-99 to more than 4 percent in 2004-05 • Growth of software and IT enabled Services exports from India continue to rise at the rate of 30 per cent for the fourth year in a row with an increase of 33 per cent to $23.6 billion recorded in 2005-06. • The domestic market for software grew to $6.0 billion in FY06 from $4.8 billion in the previous fiscal • The number of employees in the IT and ITES sector grew to 1.29 million in 2005-06 from 1.05 million in FY05 • The Indian ERP market is expected to see a CAGR (compounded annual growth rate) of 25.2 per cent over the next five years. The market was $83 million in 2004, and is projected to be over $250 million in 2009

30. Paradigm shift in strategy ProductToSolution Product Company Solutions Company

31. Consumer & Product Insight Real-Time Analytics Analytical Performance Management Supply Chain Optimisation Financial Management Store Systems Supply Chain Point of Service GDS Supplier Collaboration Merchandising Transactional Ordering & Inventory WarehouseMgmt Returns Mgmt Distribution Store Operations Consumer Oriented Core Infrastructure Business Productivity Infrastructure RTA Store SCM Supplier Oriented

32. Logistic Goods receiving / Stock / Picking & Filling Distribution Sales/ PoS Goods reciving /Stock Evaluation Analysing / Reports Ordering Purchase Planning What are the common needs in retail? Distribution & Logistic Sales Purchase & Planning Analyse The continuous circle of retailing

33. Retailers Focus For The Next 18 Months Source: Annual Retail Technology Trends Survey conducted by RIS News and Gartner, March 2006

34. Retailers IT Initiatives For The Next 18 Months 46% 43% 42% 39% 31% 27% 16% 16% 12% Source: Annual Retail Technology Trends Survey conducted by RIS News and Gartner, March 2006

35. Each Market A retailer What hardware? Who implements? Dealing with Special needs different issues and different entities What software ? Who services me? Who coordinates? When to start? How to consolidate? Business Analysis

36. Each Market The retailer DVS’s partner DVS Solution Partner Dealing with Who implements? one solution Special needs? using structured DVS Solution Partner What software? methods and Who services me? techniques Who coordinates? receiving a When to start? uniform standard How to consolidate? solution DVS Solution Partner

37. The Retail market is a fast growing market with more dynamic changes than anything else!