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Overview of Indian Retail Sector |
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Retail Sector is the most booming sector in the Indian economy. Some of the biggest players of the world are going to enter the industry soon. It is on the threshold of bringing the next big revolution after the IT sector. Although organized retail market is not so strong as of now, it is expected to grow manifolds by the year 2010. The sector contributes 10% of the GDP, and is estimated to show 20% annual growth rate by the end of the decade as against the current growth rate of 8.5%. A CRISIL report says that the Indian retail market is the most fragmented in the world and that only 2% of the entire retailing business is in the organized sector. This suggests that the potential for growth is immense. There are about 300 new malls, 1500 supermarkets and 325 departmental stores currently being built in the cities across India.
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Estimates and predictions for retail sector:
- At present, the industry is estimated to be at more than US$ 400 billion by a study of McKinsey.
- The Economist Intelligence Unit (EIU) estimates the retail market in India will increase to US$608.9 billion in 2009 from US$394 billion in 2005.
- KPMG Report says that the organized retail would grow at a higher rate than the GDP in the next five years.
- The retail sector would generate employment for more than 2.5 million people by the year 2010, predicts an analysis by Ma Foi Management Consultants Ltd.
Some of the players present in the industry:
Archies, Bata India Ltd, Big Bazaar, Crossword, Ebony Retail Holdings Ltd., Fabmall, Food Bazaar, Globus Stores Pvt. Ltd., Health and Glow, Liberty Shoes Ltd., MTR Foods Ltd., Music World Entertainment Ltd., Pantaloon Retail India Ltd., Shoppers Stop, Style SPA Furniture Ltd, Subhiksha, Titan Industries, Lifestyle, etc.
New entrants entering the market soon will be Reliance Retail Ltd, Wal-Mart Stores, Carrefour, Tesco, Boots Group, etc.
Evolution of the Sector
Weekly Markets, Village and Rural Melas
Source of entertainment
Rural and historic reach
Convenience stores, Mom-and-pop / Kirana shops
Neighborhood stores/convenience
Traditional and pervasive reach
PDS outlets, Khadi stores, Cooperatives
Government supported
Availability/low costs/distribution
Exclusive Brand outlets, Hypermarkets and Supermarkets, Department stores and Shopping malls.
Shopping experience/ efficiency
Modern formats/ international
Modern Format retailers
Supermarkets
Hypermarkets
Department Stores
Specialty Chains
Company Owned Company Operated
Traditional Format Retailers
Kiranas: Traditional Mom and Pop Stores
Kiosks
Street Markets
Exclusive /Multiple Brand Outlets
Traditional vis a vis Modern Format Retailers
The retail boom will face a strong competition from the 12 million mom-and-pop stores. These are easily accessible and provide services like free home delivery and goods at credit, which is not possible with hypermarkets and supermarkets. Buying from Malls, Supermarkets and Department stores like Subhiksha, Marks & Spencers, etc. provide a different environment where one can pick and choose from a variety of products. Owing to the entry of such big players, the small shopkeepers fear losing their business. Reliance Retail Ltd. has been inviting such people to join in its Dairy business as franchisees.
Challenges
The Indian Retail sector is constantly shakened with cut throat competition. It is also facing challenges in the form of shortages for management professionals, cash flow, supply chain management and frauds.
International retailers
There has been greater influence of brands like Walmart, Tommy Hilfiger, Carrefour, Marks & Spencer, Nike, etc in the big cities of India for long
Evolution
Retail Formats
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