Retail Sector in India

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Indian Retail Sector
March 2011

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Table of Contents
Title
Executive Summary Section 1: Evolution of Indian Retail Evolution of Indian Retail Indian retail has evolved into a major growth opportunity Supported by strong economic fundamentals Domestic Retailers Indian retail: Changing with times Indian Retail: 100% FDI – The Implications Industry Speaks…on FDI in Multibrand Retail Section 2: Learning from the Past Learning from the Past Case Study: Vishal Retail Section 3: Consolidation Consolidation Section 4: View on Future View on Future Model APMC Act View on Future Industry speaks…on GST

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5-6 7 8 9 10 11 12 13 14 15 16-17 18 19 20 – 24 25 26 – 29 30 31 32

Strictly Private and Confidential

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Table of Contents
Title
View on Future Section 5: Critical issues in Indian Retail Critical Issues in Indian Retail sector Case Study: Aditya Retail Ltd. Critical Issues in Indian Retail sector Case Study: The SPA Group Case Study: The MobileStore Case Study: Dolphin Kidswear Critical Issues in Indian Retail sector Case Study: Guardian Lifecare Critical Issues in Indian Retail sector Case Study: Marks & Spencer Critical Issues in Indian Retail sector Case Study: Max Hypermarket Case Study: Inorbit Mall Section 6: Capital Market and Latest Deals Indian Retail: Capital Market snapshot Indian Retail: Latest Deals Section 7: Analysis of Major Domestic Players Pantaloon Retail Strictly Private and Confidential 3

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33– 34 35 36 37 – 38 39 40 – 41 42 43 44 45 46-49 50-51 52-57 58-60 61 62 63 64 65 66-71

Table of Contents
Title
Shoppers Stop Tata Group Brandhouse Retail Provogue Reliance Retail Domestic Players – Trading Multiples About Resurgent India Disclaimer

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72 – 75 76 – 78 79 80 81 – 83 84 85 86

Strictly Private and Confidential

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Executive Summary
India is the fifth largest retail market globally, with a size of INR 16 trn, and has been growing at 15% per annum. Organized retail accounts for just 5% of total retail sales and has been growing at 35% CAGR. Though the journey has so far been rather mixed, organized retail is being tipped as one of the biggest gainers from growing consumerism and rising income. India’s robust macro- and microeconomic fundamentals, such as robust GDP growth, higher incomes, increasing personal consumption, favourable demographics and supportive government policies, will accelerate the growth of the retail sector We have structured the report broadly In three parts (1) Learning from the past (2) Consolidation (3) View on future (4) Critical issues 1) Learning from the Past: During 2005-2007, the sector was in a hyper growth phase. In pursuit to capture market, companies made strategic as well as operational errors which has been broadly classified as follows: i. Race for increasing retail space resulting in haphazard growth ii.Unviable formats iii.High lease rentals iv.Manpower costs and productivity issues v.Poor backend infrastructure vi.Entry of too many new players 2) Consolidation: During the global slowdown phase of 2007-2009, the Indian retail players paused to realize their past mistakes and took time and effort to re-organize themselves: i.Focus on profitable growth ii.Exit from unprofitable stores / formats iii.Rental renegotiation / revenue sharing arrangements iv.Reduction in salaries / higher manpower productivity v.Significant investments in backend vi.Exit of unsuccessful new entrants Industry also witnessed failures like Subhiksha and Vishal Retail with many other existing players still trying to fine tune their operations Strictly Private and Confidential 5

Executive Summary
3) View on future: Post consolidation, the sector is now revitalized and is poised to fully benefit from India's Next Trillion Dollar opportunity: i.Consumer sentiment improving ii.Same store sales rising iii.Store additions accelerating iv.Policy resolutions are potential upside triggers - FDI, GST, APMC Act, etc. 4) Critical Issues in...
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