Indian Retail Sector

Retail Sector in India

Retail is clearly the sector that is poised to show the highest growth in the next five years. The sector is set for a revolution, as both the present players and new entrants are gearing up to explore the market. With around 12 million retail outlets pan India and an estimated size of around $450 billion, the retail sector perhaps remains one of the key contributors to India’s GDP.

Accounting for about 15-20% of employment opportunities in the country, this is one of the fastest evolving entities in the global retail market. There are about 300 new malls, 1500 supermarkets and 325 departmental stores currently under construction. Many players are coming up with huge investments, due to which the present 12 million mom-and-pop shops and kirana stores fear losing their business. At present around 93 percent of the industry is unorganized with major revenues raked in and employment opportunities generated from the following segments:
  • Fashion
  • Food
  • Music
  • Consumer Durables
  • Furniture
  • Health
  • Telecom

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Retail Landscape

Modern retail development in India is focused on the following cities:

  • Mumbai
  • Pune
  • Ahmedabad
  • Delhi and the National Capital Region
  • Chennai
  • Banglore
  • Hyderabad
  • Kolkata
Leading Indian Retailers

Bata India Ltd, Big Bazaar, Crossword, Ebony Retail Holdings Ltd., Food Bazaar, Globus Stores Pvt. Ltd., Liberty shoes Ltd., Music World Entertainment Ltd., Pantaloon Retail India Ltd., Shoppers Stop, Subhiksha, Titan Industries, Trent and the new entrants penetrating the market soon will include Reliance Retail Ltd, Wal-Mart Stores, Carrefour, Tesco, Boots Group, etc.

Retail Industry in India- Present Scenario

The organized sector which accounts for approximately 7% at present reflects massive growth potential with increased penetration in the near future

The food segment remains the key contributor, with the luxury market not lagging far behind by presently being pitched at USD 3.5 billion

Things are looking bright for the apparel market with demand for ready made garments growing at a rate of forty- forty five percent per year

Reasons behind Success in India

As per the Global Retail Development Index 2012, the Indian retail industry is comfortably placed in the 5th position among the top thirty rising markets for retail. What more? The sector is estimated to grow manifold with employment opportunities shooting up in the near future. Let us find out the reasons behind the phenomenal success:

The increased spending power of Indians— As opposed to earlier times when shopping was only considered a necessity, now armed with a greater awareness about local and global brands and the power to spend Indians today are ready to spend big on luxury items thereby spurring fast revenues for this sector. Growth of online marketing has made things easier. Needless to mention here that the fastest emerging areas in this sector are apparel, e-commerce, grocery, lifestyle and fashion

Consumerism has been effectively complimented by the retailers’ understanding of customer demands

The growth of real estate in India has propelled emergence of shopping malls and mega malls spelling profits for organized retail business

The Indian culture encompassing a range of rituals like marriages, pujas itself has been encouraging this sector for a long time

The introduction of 100 percent FDI (Foreign Direct Investment) in multi-brand retail will be a major boost for cash constrained retailers in India. Shoppers Stop and Pantaloons Retail India etc are likely to benefit big time from this move

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Percentage of Organized Retail

USA - 85%
Taiwan - 81%
Malaysia - 55%
Thailand - 40%
Brazil - 36%
Indonesia - 30%
Poland - 20%
China - 20%
India - 3%

Key Trends

The existing players like Big Bazaar, Shoppers' Stop, Piramyd are expanding to smaller towns and cities. Many other business houses are planning to enter the retail sector either on their own or through partnerships. New entrants like Reliance Retail Ltd and Wal-Mart are going to enter the market soon. Even rural areas will provide a huge opportunity to be explored.

Estimates and Predictions
  • The industry is estimated to be more than US$ 400 billion by a study of McKinsey.
  • The Economist Intelligence Unit (EIU) estimates the retail market in India to increase to US$608.9 billion in 2009 from US$394 billion in2005.
  • A KPMG report says that the organized retail would grow at a higher rate than GDP in the next five years.
  • The retail sector would generate employment for more than 2.5 million people by the year 2010, says an analysis by Ma Foi Management Consultants Ltd.
Benefits of FDI in Retail Sector
  • Higher competition would lead to higher quality in products and services.
  • Better lifestyle as better products would be introduced.
  • Exports would increase due to greater sourcing of major players.
  • Investment in whole supply chain would increase.
  • Technology would be upgraded in terms of logistics, production, and distribution channels.
  • The markets of the sector would flourish and develop.
  • Employment would increase and skills & manpower will develop.
  • A strong retailing sector would promote tourism.
  • Economies of scale would help lower consumer prices and increase the purchasing power of the consumer.
  • In the long term it will be beneficial in the up-gradation of agriculture and small scale & medium scale industries.
Indian Consumerism
The Indian consumer behaviour is rapidly changing with a shift in new generation's preference towards luxury commodities

Retail Space: A Scope for Real Estate Sector
With new boom in the retail industry, the country has identified new scope for real estate development. The already revolutionizing urbanization and growing demand for finished products has necessitated development of new space for retail outlets.

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Future Estimates

The Consumer durables market presently pitched at USD 6.5 billion is expected to grow at CAGR of 18%

Luxury market is likely to feature amongst the top 12 largest retail markets across the globe by 2015

With decent hike in per capita income in the rural areas, the retail sector is expected to make considerable penetration there

Modern retail is expected to reach a massive USD 220 billion in the next 8 years

*Information and figures have been drawn from,,, and
Last Updated on : 15/11/2013