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M<br />
FOUNDATION<br />
Exhibit 10:<br />
Higher gross margins for Future Retail vs. D-Mart due to product mix<br />
F18<br />
Future Retail<br />
D-Mart*<br />
Overall gross margins 26% 16%<br />
Revenue Mix<br />
Food and HPC 45% 72%<br />
Apparel and general merchandise 55% 28%<br />
10ppt gross margin differential attributable to<br />
product mix<br />
In our estimates category gross margins are:<br />
30-40% for Apparel<br />
20-25% for General Merchandise<br />
15-16% for Food & HPC (Grocery)<br />
Source: Morgan Stanley Research Note: * D-Mart is listed as Avenue Supermarts<br />
Investing in technologies like scan &<br />
go: Based on our discussion with the<br />
industry, >7% of in-store sales are lost<br />
to customers who simply leave if the<br />
queue at the till is long. Future Retail<br />
has already started allowing its customers<br />
to pre-book their time slot for<br />
billing. However, adding the capability<br />
of scan and pay, where members can<br />
scan goods on their mobile devices<br />
while they are still shopping and pay<br />
through an app, could increase store<br />
sales, improve customer retention, and<br />
reduce the need for store labor (can be<br />
as high as 25% of all in-store labor).<br />
Exhibit 11:<br />
Illustration of the 'Scan and Go' shopping model<br />
Customer enters the store<br />
Source: Morgan Stanley Research<br />
Scan and<br />
Pay<br />
Customer scans the bar codes of her shopping basket<br />
via an app and seamlessly pays via a wallet<br />
Best placed in store based retail<br />
Source: Morgan Stanley Research<br />
16
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