零售4.0贏在20年代

1、Organized retail in India has been shaped by three distinct growth waves over the past decades. As we step into the 20s, we look back and reflect on how the major predictions by the industry, of the past decade, have played out. Have the themes around consumer preferences, retailer profitability, bi

2、g-box formats, digital, e-commerce and the unorganized sector developed as anticipated?This report talks about likely trends that could shape the industry in the next 5-10 years, considering multiple dimensions of consumer shifts, supply side innovations, data and technology driven disruptions, new

3、competitive forces and regulations.Retail in India continues to be fragmented. There is large headroom for the top five retailers to grow their market share from the current 5% to 10-12% in the next decade. In order to achieve this, retailers would need to drive business model innovations through th

4、emes around value proposition and operating model. The choices made would play a key role in shaping Retail in the 20s.The BCG-RAI report “Retail 4.0: Winning the 20s” is a useful guide for retailers, as it outlines the way forward imperatives in the form of must dos and choices. Whilst there is a s

5、trong consumption story waiting to unfold, retailers would need to adapt and rethink business models to stay ahead of the constantly evolving market dynamics and win in the next decade.Foreword10REFLECTIONS OF THE PAST DECADE28FORCES EXPECTED TO SHAPE INDIAN RETAIL44THEMES FOR THE NEXT DECADERetail

6、in India has come a long way. Evolution has seen waves of growth over the past three decades which can be synthesized into three distinct waves. The first wave was all about a new physical world of retail experience through large format multi-brand stores and exclusive branded stores, the second was

7、 triggered by the entry of large players in food retail through hyper and supermarkets, and the third fueled by rise of e-commerce and foreign brands.As we step into a new decade, retail is expected to cross the trillion-dollar mark on the back of multiple structural, socio-demographic and economic

8、drivers to boost consumption but winners will need to establish models to viably tap the demand.We take a moment to reflect whether major industry expectations of the past decade have played out as anticipated. The past decade saw sustained profitable models emerge in large retail categories with Va

9、lue retail being a clear proposition that has appealed to consumers. Small neighborhood stores continue to stay relevant amidst competition from e-commerce and modern trade. E-commerce has shown strong growth but penetration and share vary across categories. Mixed pathways have started to gain promi

10、nence vs. pure channel specific customer journeys. Hence, while many predictions landed well, a few have turned out differently.We believe that with constantly evolving market dynamics, the future of Indian retail is likely to be shaped by five distinct forces - consumer shifts, supply side innovati

11、ons, data and technology driven disruptions, new forms of competition and regulatory direction.EXECUTIVE SUMMARYThe India consumer is gradually but distinctly changing across multiple dimensions. The need for convenience, personalization, shopping on trend, multi-channel engagement and bias towards

12、healthy living are becoming basic expectations. While some of these trends will continue to play out as is, a few could be conflicted with evolving preferences; e.g. convenience vs. gradual rise in sustainability, or hyper- personalization versus rising concerns around data and privacy. Some of the

13、other emerging trends such as preference for renting over owning, shift towards experiences and brand affinity could go up or down, as witnessed in global markets.Retailers in parallel are constantly transforming to solve for challenges. Globally, players have innovated on multiple fronts to improve

14、 retail economics. Some of these are likely to play out in India and gain scale. Alliances/ ecosystems could emerge in multiple shapes and forms to solve for growth, smaller store formats could gain prominence to drive improved economics, gig workforce could be a solve for flexible labor and private

15、 labels could extend across categories to deliver better margins/ differentiated proposition.New data and technology driven trends could disrupt retail to improve customer journeys, shopper experiences and economics. The industry could also be impacted by new competitive forces who bring in a fresh

16、perspective, e.g. social commerce and service players extending into retail. Regulations would constantly shape retail on multiple fronts such as FDI rules, minimum wages, tariffs, etc.A significant portion of Indian retail continues to be fragmented. There is large headroom for the top retailers to

17、 increase their market share from the current 5% to 10-12% over the next decade, tapping into their established presence. This would require retailers to regularly evaluate model choices, network expansion opportunities and partnerships to build an edge. How clearly and effectively one adopts, will

18、determine future success.Innovation choices will need to be made on both the core consumer value proposition as well as the operating model. Based on BCGs learnings globally, there could be multiple themes that play out/ gain prominence in the 20s. While some themes on value proposition such as conv

19、enience and experiential retail are already visible in India, nascent themes such as responsible and alternate retail could gain scale. Models anchoring alliances, technology and the much talked about gig economy could become the cornerstones of new retail.Some global retailers have built their own

20、unique models through a cluster of choices as they look at their winning script for the 20s. Irrespective of the choice set, there are some clear no regret actions to win in the next decade. Retailers must improve organization agility and continue to develop their unique products/ experiences with c

21、ustomer relationship at the forefront. Partnerships would be key, along with building cost efficient and technology enabled operations.We hope the report will serve as an inspiration and a call to action for retailers determined to winning the 20s.Retail 4.0: Winning the 20s10REFLECTIONS OF THE PAST

22、 DECADEReflections of the past decade11Organized retail in India has come a long way, since its inception in the early 1990s.Three distinct growth waves have revolutionized Indianretail over the past few decades. Regulations related to opening up the market and bold bets by domestic and internationa

23、l players have fueled these waves.The market has grown steadily in the past and is likely to continue on this growth trajectory in the long term, on the backof multiple structural, socio-demographic and economic drivers.1990sNew world of Physical Retail(Modern Trade & Exclusive Branded Stores)2000sE

24、ntry of Hypers & SupersWave 1Wave 2FDI in cash & carry permitted (1996)Milestones1991first Modern Trade store(Shoppers Stop in Mumbai)1995-96first exclusive Adidas, Reebok store first Foodworld store from RPG1997-98first Pantaloons store from Future Group first Westside from TrentWith the opening up

25、 of the economy, organized players launched modern trade formats and exclusive branded stores2001first hypermarket(Big Bazaar)2003first cash & carry(Metro in Bengaluru)2006Reliance enters organizedretail with Reliance FreshOrganized players started competing with smaller stores, through larger multi

26、-category stores and formalized supply chainsFuture Group reached$1 billion (2007)Retail 4.0: Winning the 20s12Organized retail in India has come a long waySize of marketSelect events2010sRise of E-commerce & Foreign Brands2020sWave 4Wave 3TimeFDI permits led to the introduction ofmultiple foreign b

27、rands and attractiveness ofe-commerce paved the way for a new digital age2010Zara first store in Delhi2012Amazon enters India2015H&M first store in Delhi2018Walmart acquires Flipkart Ikea first store in Hyderabad2019Uniqlo first store in DelhiWhat will drive the next big wave of growth in the 2020s?

28、51% FDI in Multi-brand, 100% in Single-brand (2013)DMart most valued retailer in 1 year of IPO (2017)13Reflections of the past decadeIndian consumption likely to outperform developed countriesIndian retail expected to grow at 9-11%Consumption 2025 ($ Tn)Size of retail ($ Tn)3.6%0.720192025Note: 1. P

29、rivate consumption expenditure at current market prices in US$Source: RBI, IMF, EIU, Oxford Economics, Euromonitor, CCI Proprietary Consumption Model, BCG analysis1.1-1.34.5%3.4%3.4%India retail market estimated to reach $1.11.3 Tn by 20253.29.9%1.8Consumption CAGR1 (20192025)CAGR9-11%Indi

30、as long term consumption and retail growth drivers are expected to provide a strong foundation for future growth.However, in the past few months, the economy witnessed signs of a consumptionslowdown. The extent of this slowdown varies across categories, channels and geographies, e.g.Product categori

31、es such as white goods and mobile phones delivered double digit growthE-commerce and physical multi-category organized retail grew robustlyFMCG grew by 7% overthe past 12 monthsThe strength of multiple structural, socio- demographic and economic drivers can sustain high growth in the industry over t

32、he 20s.Retail 4.0: Winning the 20s14Note: 1. Nuclear households are households comprised of a married couple or a man or a woman living alone or with unmarried children (biological, adopted, or fostered) with or without unrelated individuals. 2. Gen I constitutes individuals who have grown up in the

33、 liberalized economy (25k sq. ft)Neighborhood and convenience (4k sq. ft)3,7002,4003,70088%59%21%2%10%52%35% 20%201620172018201920142015 13%Hypermarkets would gain prominence and lead growth10 years ago10 years laterRetail moving to smaller sized stores amidstrental pressuresShift to smaller formats

34、 observed, driven by convenience and space productivityNet stores added in 2018 & 2019Average size of store (sq. ft)38k11k2kE-commerce would gain fair share across categories10 years agolong way to go; penetration varies across categoriesSource: Euromonitor. Toys & Games excludes retailers specializ

35、ing in computer games. Health excludes prescription medication. Data not available for Beauty & Personal Care prior to 2010, Homeware & Furnishings prior to 2013.Online disruption varies by category, with fast gains inElectronics and Toys & GamesOnline share of total retail sales in IndiaRetail 4.0:

36、 Winning the 20s225Slower shift to onlineFaster shift to online2008201815.3%Electronics1.4%2008201810.8%0.3%Apparel & Footwear201320185.0%Homeware & Furnishings0.1%2008201813.0%Toys & Games0.5%20102018Beauty &Personal Care0.1%1.6%2018Accessories & Eyewear1.8%10 years later20080.5%E-commerce has grow

37、n but still a20080.2%2018Health2.3%OnlineOffline (Includes modern trade, general trade)Note: 1. Q - Can you tell me what proportion of total spends did you make across the channels for purchasing category? Data of only urban consumers. 2. Now I want you to think about the last time you purchased XYZ

38、, what was the occasion/reason for your purchase? Data of only urban consumers. CCI Survey and BCG analysis, 2019, N=1367Online important for mobile and service categories; offline continues todominate across others% spend by channel1Trigger2Occasions/ yearSpend/ occasion (Rs.)Order- in foodExperime

39、ntative13.860544%56%Leisure travelExperimentative1.815,05154%46%SocietalMobileApparel35%7%65%93%FunctionalCelebratory/0.47.210,8602,097Electricals2%98%Functional1.5718Staples1%99%Functional17.01,96623Reflections of the past decadeDigital would likely create a face-off between pure online and offline

40、 channels10 years ago10 years laterMixed pathways playing out; Multi- channel has unlocked growth for retailersSource: CCI Digital daily survey, Digital deep dive panel, CCI Buzz to bucks 2016, press search, N=12088 transactionsMixed pathways prevalent across many categoriesPlayers leveraging multi-

41、channel to drive growthSeveral online only players have extended their physical presence, either independently or via associationsMany offline only players have scaled their e-commerce portfolios to build a complementary multi-channel presenceRetail 4.0: Winning the 20s246Largely offlineMixedPure On

42、linePure OfflineFreshfood1%94%5%Staples2%91%7%Healthcare2%93%4%FMCG4%80%16%Packagedfood1%94% transactions100%5%Online only players experimenting with physical storesA leading Indian beauty retailer, as part of its offline expansion, has two types of stores one houses luxury premium brands and the ot

43、her carries a portfolio of brands that trend on its online platformOffline only players growing online presenceSome leading apparel players in India have established their online business and are actively looking to scale this channel some even creating their own online only portfolios25Reflections

44、of the past decadeSignificant mixedLargely onlineLarge Appliances42%58%Mobile23%23%Apparel22%65%54% 13%Leisuretour12%37%51%Travel ticket14%34%52%Movie ticket38%5%57%Small Appliances17%49%34%Supply chain would move to integrated farm-to-fork10 years ago10 years laterSome momentum observed in integrat

45、ion, end-to- end flows yet to be solvedDifferential tax regimes across statesSuboptimal network of stock points andinventory build-upFragmented transport market and players increased logistics costsRetail 4.0: Winning the 20s26GST enables better efficiencies in logistics, consolidated warehouses; 20

46、% reduction in truck turnaround timeTransportation still mostly fragmented; 3PL growing at15% CAGR, yet only 5% of logistics marketTaxation and sourcingTransportationPoor infrastructure led to inefficiencies through the value chain (ports, highways, warehouses, cold chain)Road and ports have improve

47、d, long way to go; cold chain infrastructure yet to scale, 30% agricultural produce wastageInfrastructureLow technology adoption and limited end-to-end communication affected operations and collaborationSupplier integration limitedRetailers started to solve a few challenges, e.g. supplier integratio

48、n, rationalizing SKUs, using technology to improve operationsInternalSource: Secondary research, BCG experienceFarm-to-fork integration largely unsolved, however headedin the right direction7Structural challenges and how itaffected the industrySome progress seenRole of store associates would diminis

49、h, given increasing use cases of technology10 years ago10 years laterStore associates still relevant, also play the role of experts and advisorsStaff/ store experience and familiarity/ trust in channelcontinue to be important for consumers% respondents1OthersProximity10%5%8%17%7%23%30%Apparel13%11%3

50、5%10%13%18%Mobile18%10%9%31%8%24%ElectricalsNote: 1. Q - Considering Rank 1 responses only: Can you look at the list below and rank top 3 reasons basis which you selected the channel? Data of only urban consumersSource: CCI Survey 2019, N=1367 and BCG analysisA leading paint company has in-house col

51、or consultants who help customers decide what works best for their homes27Familiarity/ Trust in channelGood staff/ Store experienceVarietyReinventing the store associate roleA leading beauty retailer has in-store makeup advisors, color and skincare experts, who provide customers with consultations,

52、touch-ups and makeoversCross-category differences in preferred channel5%9%14%14%28%18%12%StaplesReflections of the past decade813%5%27%19%21%16%Flight8%7%17%16%37%16%HotelLeisure travelPricing/ attractive offers/ bargainingLeisure travelConvenience to shop/ to pay100%Retail 4.0: Winning the 20s28FOR

53、CES EXPECTED TO SHAPE INDIAN RETAIL29Forces expected to shape Indian retailForces that couldshape the futureIndian retail landscapeIncreased margin pressures, retail space crunch, rising costs are putting considerable strain on business models pushing retailers to innovate to win in the next decadeS

54、UPPLY SIDEINNOVATIONSCONSUMERSHIFTSGiven the attitudinal and demographic change in consumer preferences, there has been a significant shift in the way consumers shop forcing retailers to constantly adapt to stay ahead of the curveRetail 4.0: Winning the 20s30With changes in FDI, GST and other rules,

55、 the Indian retail industrycontinues to be sensitive to regulations anda changing political landscape driving retailers to rethink businesses and modelsDATA AND TECHNOLOGYDRIVEN DISRUPTIONSWith the onset of the digital revolution,it is imperative for retailers to embrace data and technology to shape

56、 consumer shopping preferences and minimize costs prompting retailers to up their gameNEW COMPETITIVEFORCESAs boundaries across industries continue to blur, the retail industry might see itself facing competition from a new genre of players unsettling retailers and traditional models by bringing in

57、a fresh perspectiveREGULATIONSForces expected to shape Indian retail31The Indian consumer is fundamentally changingPreferenceConsumers in the pastShop on trendRent or ownShift towards experiencesBrand affinityMulti-channel engagementHealthy livingShift in purchase decision makerMany IndiasNeed for c

58、onveniencePersonalizationWere willing to spend time/ effort in identifying right product out of offeringsShopped mainly for utilityTook pride in owning possessionsConservative outlook, believed in asset creationAttracted to international brandsRelied on offline channels for entire purchase journeyFo

59、cused on health largely by managing food, exerciseMen were the dominant decision makersLimited choice, were willing to go with mass productInteraction and influenceSelect interaction with retailers via traditional mediaNote: 1. CCI Survey, 2019, N=5000 and BCG analysisSource: Ten Trends That Are Alt

60、ering Consumer Behavior in India, BCG 201932 Retail 4.0: Winning the 20sAccepted mass product offering push; were willing to skim through and selectConsumers of today33Consumer shiftsFuture expectationConvenience on the rise with time compression, expectation to access whenever and wherever: 57%1 us