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Scope of the Retail Sector |
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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. This sector contributes 10% of India's GDP and the current growth rate is 8.5%. The present size of the organized retailing sector is approximately 3% and is expected to grow to 25-30% by the year 2010. 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. Most predictions say that the sector might reach to US$ 400-600 billion by the year 2010.
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Global retail giants such as Wal-Mart, Tesco, Germany's Metro AG and many others are ready to enter the retail markets. The rising demand of branded products and increase in purchasing power have lured these companies to enter the market.
Retail Landscape
Modern retail development in India is focused on the following cities:
West
Mumbai
Pune
Ahmedabad
North
Delhi and the National Capital Region
South
Chennai
Banglore
Hyderabad
East
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.
Current Scenario
A glimpse of the International Retail
One of the world's largest industries exceeding US$ 9 trillion
47 global fortune companies & 25 of Asia's top 200 companies are retailers
Dominated by developed countries
US, EU & Japan constitute 80% of world retail sales.
Biggest player in India is Pantaloon Retail India Limited.
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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