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lndla's MC8 secLor ls domlnaLed by small LradlLlonal reLall ouLleLs lragmenLed offerlng sLlll accounLs
for abouL mosL of Lhe counLry's grocery and food reLall sales Powever Lhls ls changlng fasL as
mulLlnaLlonals begln Lo seek opporLunlLles Lo enLer lndla and as local organlzed players acceleraLe Lhelr
own expanslon and buslnessacLlvlLy efforLs ln preparaLlon for greaLer compeLlLlon 1he counLry's
economlc developmenL has allowed for Lhe furLher developmenL of MC8 and food as lncreaslngly
wealLhy consumers ln ma[or Lowns and clLles Lurn Lo modern formaLs ln search of Lhe convenlence and
quallLy LhaL Lhey now deslre and can lncreaslngly afford
1o daLe lndependenLs and modern reLallers have operaLed effecLlvely slde by slde Lhanks Lo largescale
ouLleLs caLerlng for wealLhler consumers only and governmenL lul leglslaLlon whlch only allows
mulLlbrand reLallers Lo operaLe ln parLnershlp wlLh local companles keeplng ouL aggresslvely
expanslon orlenLed mulLlnaLlonals Powever Lhe announcemenL ln laLe 2006 LhaL uS ma[or Wa|Mart
had secured a deal wlLh local conglomeraLe 8hart| changed Lhls and Lhe correspondlng buslness acLlvlLy
levels ln Lerms of expanslon and prlce have meanL LhaL modern players have sLarLed Lo Lread on Lhe
Loes of lndependenLs A precedenL has been seL vla whlch mulLlnaLlonals can enLer Lhe markeL ln
parLnershlp wlLh local players
Puge lncome lnequallLles remaln ln lndla regardless of economlc developmenL and alLhough Lhe MC8
lndusLry ls growlng fasL and prlces are falllng ln llne wlLh compeLlLlve dlscounLlng lL remalns Lhe reserve
of Lhe mlnorlLy ConsequenLly Lhere ls sLlll a vasL consumer base for lndependenL LradlLlonal reLall
operaLors Powever MC8 ls gradually movlng ouL of ma[or urban cenLers and lnLo secondary and
LerLlary Lowns and clLles and more rural areas
A key feaLure of lndla's grocery reLall markeL ls LhaL Lhe ma[orlLy of reLall ouLleLs sell producLs aL Lhe
maxlmum reLall prlce (M8) whlch ls admlnlsLered by Lhe governmenL and prlnLed on each lLem by
manufacLurers As a consequence Lhere ls mlnlmal prlce compeLlLlon among Lhe varlous sLore formaLs
over some popular food lLems 1he arrlval of flnanclally powerful mulLlnaLlonals wlLh vasL sourclng
neLworks may eradlcaLe Lhe lmporLance of governmenLlmposed M8s slnce modern reLallers are
llkely Lo focus on low prlces as a compeLlLlve Lool and as a means of encouraglng new consumers Lo Lry
Lhe modern concepL WlLhln lndla's grocery reLall secLor all four key modern formaLs are presenL 1he
supermarkeL and convenlence sLore secLors have experlenced Lhe greaLesL developmenL Lo daLe whlle
Lhe hypermarkeL and dlscounL secLors are sLlll ln Lhelr lnfancy Agaln Lhe arrlval of mulLlnaLlonals can be
expecLed Lo change Lhls wlLh boLh formaLs llkely Lo aLLracL conslderable lnvesLmenL ln Lhe early phases
of markeL enLry 1here are a mlnlmal number of mulLlformaL reLallers ln lndla wlLh Lhose LhaL do have
a mulLlformaL offerlng Lendlng Lo be among Lhe secLor leaders and Lyplcally Lhey are Lhose
conglomeraLes LhaL have developed a reLall arm ln a bld Lo explolL Lhls growLh opporLunlLy Slmllarly
Lhere ls an absence of naLlonal operaLors wlLh mosL modern reLallers havlng chosen Lo expand Lhelr
operaLlons wlLhln Lhelr home sLaLe ln order Lo reduce dlsLrlbuLlon cosLslnefflclenL supply chaln
managemenL ls regarded and as one of Lhe blggesL problems faclng Lhe lndlan MC8 and food lndusLry
Loday Whlle less problemaLlc for Lhe broader reLall lndusLry supply chaln problems have been
prevalenL ln Lhe grocery reLall lndusLry where Lhe Llmely dlsLrlbuLlon of perlshable lLems ls vlLal
8eLallers have blamed poor road lnfrasLrucLure and complex federal and sLaLe Lax laws whlch make
crosssLaLe LransporL dlfflculL lndla's LransporL neLworks cerLalnly need lnvesLmenL alLhough rural
lnfrasLrucLure and naLlonal hlghways have been ldenLlfled along wlLh power lnfrasLrucLure as Lhe maln
beneflclarles of governmenL spendlng As lL sLands lndla's vasL slze and underdeveloped lnfrasLrucLure
ls prevenLlng reLallers from openlng sLores any greaL dlsLance from Lhelr dlsLrlbuLlon hubs

WlLhln Lhls envlronmenL reLallers musL Lake responslblllLy for supply chaln lnefflclencles raLher Lhan
regard Lhem as a naLlonal problem affecLlng all players equally AL a company level Lhe prlmary problem
ls a lack of supply chaln experLlse 1he ma[orlLy of reLallers have yeL Lo seL up a separaLe unlL for
managlng supply chaln lssues lnsLead LreaLlng supplles as parL of Lhe dayLoday runnlng of a sLore 1hls
has meanL a falrly unldlrecLlonal flow of lnformaLlon reLallers slmply summon sLock when Lhey need lL
and Lhen walL for lL Lo arrlve and a lack of lnvesLmenL ln anywhere near enough sLorage space Lo
supporL Lhe scale of mosL reLallers' amblLlons

Industry Iorecast Scenar|o
MC8 sales ln lndla are forecasL Lo undergo exploslve growLh over Lhe forecasL perlod 8Ml predlcLs LhaL
sales Lhrough modern reLall ouLleLs wlll lncrease by 2176 ln local currency Lerms Lo reach ln87928bn
ln 2014 1hls phenomenal forecasL ls a consequence of lndla's dramaLlc and rapld shlfL from
lndependenLly owned small reLall Lo large modern ouLleLs alLhough lL musL also be noLed LhaL Lhls
growLh ls forecasL Lo come from a very low sLarLlng polnL 1he maln drlver of Lhls growLh ls Lhe lndlan
economy 1he remarkable speed and endurance of lndla's economlc recovery endorses our longheld
bulllsh vlew of Lhe counLry's growLh prospecLs uesplLe Lhe drlesL monsoon ln almosL 40 years and Lhe
soberlng effecLs of Lhe global recesslon lndlan economlc acLlvlLy has held up specLacularly well wlLh key
daLa polnLs from lndusLrlal producLlon Lo forelgn dlrecL lnvesLmenL all bounclng back sLrongly We
belleve Lhe lndlan economy wlll be much less exposed Lo developed world deleveraglng Lhan lLs reglonal
peers wlLh prlvaLe consumpLlon accounLlng for up Lo 60 of Cu