Industry Analysis (6/10)

Who doesn’t love shopping? If you own Branded Apparel and Accessories and are helping generate huge margins for those companies, why not invest in those companies and reap the benefits of their success as well? Let’s delve deep into the Retail industry before making any major decisions.

Retail Industry🛒👠📦

The Indian Retail industry ranks 4th largest in the world in terms of size and accounts for over 10% of Indian GDP and 8% of Indian employment. This industry is estimated to grow at 10.15% CAGR in the next 4 years. Increasing income level and Brand consciousness are some of the important drivers of growth.

🌟 Cyclicity: The retail industry is cyclical in nature (Good economic conditions can
help increase the purchasing power of the citizens)

🌟 Value Chain:
➡️ Inbound Logistics (Sourcing raw materials from vendors, Warehousing)
➡️ Production (Raw materials to finished goods)
➡️ Outbound Logistics (Distribution network, Transportation)
➡️ Marketing and Sales (Promotions, Advertising, Discounts)
➡️ Service (After sales, Delivery service)

🌟 Revenue Drivers:
➡️ Product Sales
➡️ Brand Value
➡️ Other revenue (Rewards, Loyalty programmes)

🌟 Cost Drivers:
➡️ Production costs (Raw Material, Labour)
➡️ Fixed (Rent for warehousing)
➡️ Advertisement costs

🌟 Growth Drivers:
➡️ Rising awareness among individuals
➡️ Retail penetration (Major part of retail is still unorganized)
➡️ Rise in disposable income (economic conditions)

🌟 Key Market Players:

The retail industry is very paced with changing consumer demands, Industry and the companies have to cope with the technological changes to withstand the competition. It is also the industry that deals with varied product categories and hence varied margins as well (FMCG- 8-25%, Clothing and apparel- 15-30%, Jewellery 30-50%).

Segmentation in the retail Industry:

🔻Apparel & Footwear (28%)
🔻Consumer Durables & IT (26%)
🔻Jewellery (20%)
🔻Health and Entertainment (11%)
🔻Home Décor & Furnishing (8%)
🔻Beauty & Personal care (6%)
Investment Ideas - 12550490