Arvind Singhal

Organized RetailingOrganized Retailing

Challenges & Opportunities Challenges & Opportunities !!

Arvind SinghalArvind SinghalChairman – KSA TechnopakChairman – KSA Technopak

TIEcon 2003TIEcon 2003New Delhi 18New Delhi 18thth December 2003 December 2003

2TiEcon 2003 – New Delhi

Structure of the presentationStructure of the presentation

Changing India & Change DriversChanging India & Change Drivers

Opportunities in Retail (in India)Opportunities in Retail (in India)

Emerging Trends : RetailingEmerging Trends : Retailing

Winnable Practices:Winnable Practices:

Retailer - Consumer InterfaceRetailer - Consumer Interface Retail OperationsRetail Operations Retailer – Supplier RelationshipRetailer – Supplier Relationship

Changing IndiaChanging India

&&

Key Drivers of ChangeKey Drivers of Change


Many DriversMany Drivers

DemographicsDemographics

Increased Global ExposureIncreased Global Exposure

Increased Discretionary Incomes across Increased Discretionary Incomes across wider spectrum of population, across wider wider spectrum of population, across wider geographygeography

Changes in LifestyleChanges in Lifestyle









Youngest Population in the worldYoungest Population in the world

Over 65% of population below 35 Years oldOver 65% of population below 35 Years old Over 50% of population below 20 Years oldOver 50% of population below 20 Years old

Contrast with:Contrast with:

Europe : Declining in many countries (Russia, Italy)Europe : Declining in many countries (Russia, Italy) USA : Immigration helping in holding up the growthUSA : Immigration helping in holding up the growth Japan: Aging and soon to declineJapan: Aging and soon to decline China: Currently young but sharp aging to set in next 20 China: Currently young but sharp aging to set in next 20

yearsyears


0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

10 – 19 20 – 49 50 – 69

2010

Working population is growing unlike other Working population is growing unlike other countriescountries

Rise in the middle would expand opportunities as 20-49 is the best Rise in the middle would expand opportunities as 20-49 is the best segment for most retailers and consumer good marketerssegment for most retailers and consumer good marketers

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

10 – 19 20 – 49 50 – 69

2000


Both ability to pay and the willingness to pay constitute “Demand”Both ability to pay and the willingness to pay constitute “Demand”

0 10 20 30 40 50 60

< 19 Yrs

20-49 Yrs

> 49 Yrs

1996 2001 2006 2010

Figures in %Source: Statistical Outline of India

Ability to pay

Willingness to pay

Working population driving Working population driving consumerismconsumerism



Young Population has no :Young Population has no :

Baggage of the pastBaggage of the past

Nehru, Gandhi, Partition etc. are “Nehru, Gandhi, Partition etc. are “things you things you read in history booksread in history books” much the same way you ” much the same way you read read

Born in an era of more open consumerismBorn in an era of more open consumerism

New Generation icons are modern achievers New Generation icons are modern achievers (Bill Gates, Narayan Murthy, Sachin Tendulkar, (Bill Gates, Narayan Murthy, Sachin Tendulkar, Shahrukh Khan, Aishwarya Rai etc.)Shahrukh Khan, Aishwarya Rai etc.)



Young Population :Young Population :

Is Confident and Optimistic about their FutureIs Confident and Optimistic about their Future

Is Willing to experimentIs Willing to experiment

Has “transient” loyalties to BrandsHas “transient” loyalties to Brands

Admires & Appreciates “Youth” and Admires & Appreciates “Youth” and “Modernity”“Modernity”









The young Indian population has an unparalleled The young Indian population has an unparalleled exposure to the outside world on account of various exposure to the outside world on account of various factors:factors:

75% or more have access to Color TV75% or more have access to Color TV

More than 250,000 Young IT and Other Professionals have More than 250,000 Young IT and Other Professionals have worked “On-Site” in any given year in North America, Europe worked “On-Site” in any given year in North America, Europe and Japanand Japan

Over 80,000 Indian students are currently studying in the US, Over 80,000 Indian students are currently studying in the US, UK, Australia and other CountriesUK, Australia and other Countries

Over 150,000 Indian’s currently working in BPO / ITES area, Over 150,000 Indian’s currently working in BPO / ITES area, vicariously getting some exposure to “life” outside Indiavicariously getting some exposure to “life” outside India



Multiplier effect of this exposure – due to the close Multiplier effect of this exposure – due to the close knit nature of Indian society – is far in excess of knit nature of Indian society – is far in excess of what these absolute numbers may showwhat these absolute numbers may show

Real Impact is already being seen in a number of Real Impact is already being seen in a number of ways: Majority of new entrepreneurial business ways: Majority of new entrepreneurial business start-ups are now from first generation, very young start-ups are now from first generation, very young entrepreneursentrepreneurs

Likewise, average age of the successful fast track Likewise, average age of the successful fast track senior managers in successful companies already senior managers in successful companies already down to late 20’s / early 30’s since the young are down to late 20’s / early 30’s since the young are perceived as more “global” and “dynamic”perceived as more “global” and “dynamic”



Far quicker adoption to “global” trends and Far quicker adoption to “global” trends and lifestyles and products / serviceslifestyles and products / services

Substantially higher expectations on delivery of Substantially higher expectations on delivery of “value” from the products and services“value” from the products and services

Far more assertive consumers!Far more assertive consumers!





Increased Discretionary Incomes Increased Discretionary Incomes across wider spectrum of population, across wider spectrum of population, across wider geographyacross wider geography



Increased Discretionary Incomes..Increased Discretionary Incomes..

Interesting phenomenon of not only “Double Interesting phenomenon of not only “Double Income” families but “multiple income” families:Income” families but “multiple income” families:

Young professionals in new generation services e.g. IT, Young professionals in new generation services e.g. IT, Retail, Food Services, Finance and Insurance Services etc. Retail, Food Services, Finance and Insurance Services etc. are in age profile of 20 – 28 and are typically still staying are in age profile of 20 – 28 and are typically still staying with the Parents (who may have their own parents still with the Parents (who may have their own parents still staying with them)staying with them)

Only one House Rent Cheque to be made, and only One Only one House Rent Cheque to be made, and only One kitchen to runkitchen to run

Substantially more spending power available than Substantially more spending power available than reflected by mere “per capita” income indicatorsreflected by mere “per capita” income indicators


Increased Discretionary Incomes..Increased Discretionary Incomes..

Spending further enhanced by increased risk-appetite for Spending further enhanced by increased risk-appetite for credit (in turn, reflected in the confidence of the “youth”)credit (in turn, reflected in the confidence of the “youth”)

Personal Credit off take has increased from about Rs 50,000 Personal Credit off take has increased from about Rs 50,000 Crores in 2000 to about Rs 160,000 Crores in 2003 giving an Crores in 2000 to about Rs 160,000 Crores in 2003 giving an unprecedented boom to high ticket item purchases e.g. unprecedented boom to high ticket item purchases e.g. durables, automobiles and housingdurables, automobiles and housing

Increased “Globalization” of high end employment (to Increased “Globalization” of high end employment (to augment the low end employment in the Gulf) further augment the low end employment in the Gulf) further spreading availability of spending power to beyond the main spreading availability of spending power to beyond the main Metro’s and Mini Metro’sMetro’s and Mini Metro’s

Next round of ITES shall take employment to hinterland of Next round of ITES shall take employment to hinterland of India e.g. Dehradun, Chandigarh, Jaipur, Goa : locations having India e.g. Dehradun, Chandigarh, Jaipur, Goa : locations having availability of graduate, English speaking young adults at low availability of graduate, English speaking young adults at low costcost








Changes In Lifestyle..Changes In Lifestyle..

With the advantage of Youth, More Globalization, and With the advantage of Youth, More Globalization, and Better Discretionary Spending incomes, lifestyle Better Discretionary Spending incomes, lifestyle changes provide multiple new opportunities in terms changes provide multiple new opportunities in terms of:of:

New Products and Services (e.g. Ready to Eat Food, New Products and Services (e.g. Ready to Eat Food, Entertainment Centers, Time / Labor Saving devices and Entertainment Centers, Time / Labor Saving devices and services e.g. Washing Machines etc.)services e.g. Washing Machines etc.)

New Channels of Distribution (e.g. Malls, Multiplexes, Home New Channels of Distribution (e.g. Malls, Multiplexes, Home Delivery and Multi-Level Marketing etc.)Delivery and Multi-Level Marketing etc.)

New Value Propositions in terms of Fashion, Convenience, New Value Propositions in terms of Fashion, Convenience, Reliability, Quality etc. rather than merely “Price”Reliability, Quality etc. rather than merely “Price”

Opportunities in RetailOpportunities in Retail

Increasing by the day !Increasing by the day !


Many Missing / Under Served Many Missing / Under Served CategoriesCategories

Food & Grocery / Food ServicesFood & Grocery / Food Services

Furniture & FurnishingsFurniture & Furnishings

Consumer DurablesConsumer Durables

Specialty e.g.Specialty e.g.

Children’s Wear / Accessories / ToysChildren’s Wear / Accessories / Toys FootwearFootwear Health, Beauty & Well-BeingHealth, Beauty & Well-Being Lingerie & Intimate ApparelLingerie & Intimate Apparel Sports / Outdoor Goods / Leisure HardwareSports / Outdoor Goods / Leisure Hardware


Many Missing / Under Served Many Missing / Under Served FormatsFormats

Discounters / Mass MerchantsDiscounters / Mass Merchants

Specialty : Category KillersSpecialty : Category Killers

CatalogCatalog

Factory Outlets / Malls Factory Outlets / Malls

Etc.Etc.

Emerging Trends in RetailEmerging Trends in Retail

(In Indian Context)(In Indian Context)


Implications for Indian RetailersImplications for Indian Retailers

Size Matters!Size Matters!

Competition shall be on Global levelCompetition shall be on Global level

Flexibility in Format Development & Product Flexibility in Format Development & Product Category Selection shall be a Key Success FactorCategory Selection shall be a Key Success Factor

Global Supply Chain Development shall also be a Global Supply Chain Development shall also be a Key Success FactorKey Success Factor


Winning Retail Propositions of Winning Retail Propositions of Tomorrow….Tomorrow….

Product

Price Value

Service/ Experience

Dif

fere

nti

atio

n o

pp

ort

un

ity

Time

Price

Product Service

• Lower Cost• Perceived Value for Money

• Quality• Uniqueness• Range

• Availability• Ambiance• Convenience• Privileges • Location

Retail Strategies revolve around these basic factors

Many Opportunities ……


…….But Will Change Over Time.But Will Change Over Time

While While ProductProduct differentiation would play a significant role, the differentiation would play a significant role, the gap will diminish due to ease in global sourcing for all gap will diminish due to ease in global sourcing for all competitorscompetitors

Experience Experience in terms of the Look and Feel of the Store would be in terms of the Look and Feel of the Store would be important, but again, the gap will diminish over timeimportant, but again, the gap will diminish over time

Superior Superior Price - ValuePrice - Value offerings would continue to be a major offerings would continue to be a major differentiator differentiator

Additionally, Additionally, Convenience of “Proximity” & “Appropriate Convenience of “Proximity” & “Appropriate Assortment”Assortment” would emerge soon as a differentiator and initiate would emerge soon as a differentiator and initiate opening of small footprint stores (as chains) as well as Catalog / opening of small footprint stores (as chains) as well as Catalog / Internet shall make a major Impact even in IndiaInternet shall make a major Impact even in India


Organized Retail Poised To Boom …Organized Retail Poised To Boom …

Many enablers:Many enablers:

Frenetic development of high quality retail space Frenetic development of high quality retail space across Indiaacross India

Increased interest of Investors in funding Retail Increased interest of Investors in funding Retail projectsprojects

Increased interest of International Brands & Increased interest of International Brands & Retailers to enter IndiaRetailers to enter India

Exceptional response of Indian consumers to Exceptional response of Indian consumers to “modern” retail options“modern” retail options

Best Practices Best Practices ??


Best Practices …..Best Practices …..

Changes far too recent to allow emergence of true Changes far too recent to allow emergence of true “best practice” examples in India“best practice” examples in India

Adapting “global” best practices in the Indian Adapting “global” best practices in the Indian business environment a bit premature at this business environment a bit premature at this juncture (juncture (either the consumer is not ready with either the consumer is not ready with spending power or the business does not yet have spending power or the business does not yet have the management and financial resourcethe management and financial resource))

Hence, at this stage, look at “Hence, at this stage, look at “winnablewinnable” practices ” practices in the Indian contextin the Indian context

Winnable Practices (In Indian Winnable Practices (In Indian Context)Context)

Retailer – Consumer InterfaceRetailer – Consumer Interface


Retail – Consumer InterfaceRetail – Consumer Interface

LocationLocation

As close to home as feasible for most product categoriesAs close to home as feasible for most product categories

AmbienceAmbience

Cleanliness, Climate ControlCleanliness, Climate Control Self ServiceSelf Service

AssortmentAssortment

Focused for specific consumer segmentsFocused for specific consumer segments


Retail – Consumer InterfaceRetail – Consumer Interface

AvailabilityAvailability

Right ProductRight Product Right Size / Style / ColorRight Size / Style / Color

InformationInformation

SignageSignage

Speed of ServiceSpeed of Service

InformationInformation Check-OutCheck-Out

Return & Exchange PolicyReturn & Exchange Policy


Retail OperationsRetail Operations


Retail OperationsRetail Operations

IT EnabledIT Enabled

Demand ForecastingDemand Forecasting Merchandise Planning & ManagementMerchandise Planning & Management ReplenishmentReplenishment Price OptimizationPrice Optimization

Efficiencies at POSEfficiencies at POS

Dynamic Category / Brand ManagementDynamic Category / Brand Management

Private Label Strategy & EfficienciesPrivate Label Strategy & Efficiencies


Retailer – Supplier InterfaceRetailer – Supplier Interface


Technology allows supply chain members to collaborate in:Technology allows supply chain members to collaborate in:

Collaborating With BuyersCollaborating With Buyers

Degree of business impactDegree of business impact

Imp

lem

en

tati

on

Im

ple

me

nta

tio

n

(sta

nd

ard

s an

d v

ola

tilit

y)(s

tan

dar

ds

and

vo

lati

lity)

LOWLOW HIGHHIGH

EASYEASY

DIFFICULTDIFFICULT

Product Product trackingtracking

POSPOS

Fashion / Fashion / Lifestyle Lifestyle trendstrends

Planning Planning forecastingforecasting

Product Product designdesign

Product Product specsspecs

TiEcon 2003 KSA analysis

To Conclude …..To Conclude …..


Key MessagesKey Messages

India & Indians are changing rapidlyIndia & Indians are changing rapidly

Understanding Consumer critical in spotting new Understanding Consumer critical in spotting new opportunities in Retailopportunities in Retail

Conditions conducive for rapid growth of Conditions conducive for rapid growth of organized retailorganized retail

Many opportunities – categories and formats!Many opportunities – categories and formats!

Thank You Thank You !!

Arvind SinghalArvind SinghalChairmanChairmanKSA Technopak India Pvt Ltd.KSA Technopak India Pvt Ltd.A-5 Pamposh EnclaveA-5 Pamposh EnclaveNew Delhi 110 048New Delhi 110 048

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