The Indian Retail industry is all set to go to the next level. According to the report prepared by global consultancy Northbridge Capital, the retail market, which is currently worth $400 billion, is clocking an annual growth rate of 30%. “The market is expected to grow to $700 billion by the end of 2010. Of the total retail market, the share of organised retail in 2008 is 7.5%, valued at $300 million,” Although most of the Indian Retail industry is still characterized by an unorganized market but the last few years have seen tremendous growth in the organised retail in India. With the Indian big giants like RPG, Pantaloons, Reliance, ITC etc and the foreign players like Adidas, Reebok, McDonalds, the Indian Organised retailing has been growing at a rapid pace. Noting that organised retail market is growing at the rate of 40%, Northbridge Capital said that faster growth rate would be maintained in the next three years, especially with the entry of major global players and Indian corporate houses.
Drivers of the Indian Organised Retail Industry
Changing consumption patterns – Convenience is the need of the hour. The concept of one stop shopping is “IN” and with the rise in the incomes, the consumers are even ready to spend more to save their time. According to a report by AT Kearney “The consumer spending in India has increased by an impressive 75 per cent in the last four years and will quadruple in the next 20 years.” Today the consumers are looking more for the luxury goods and are spending more on health and beauty care products apart from the apparel, food and grocery items.
The Emphasis on Rural markets – The Indian Retail companies has realized that the rural markets are a major source of revenue, most of which is untapped. After the arrival of ITC’s Chaupal Sagar, DCM Sriram’s Hariyali Bazaar and Tata’s kisan sansar, the other players in retail are also looking for expanding into the rural markets.
The impact of technology -.The increase in the use of internet has given a new direction to the retail industry and has led to the growth of the so called “e-age” in India. Today a large number of organizations share there information with a large number of audience through internet. The technologies like Universal Product Code or bar code, RFID chips, Electronic data interchange, Database management etc have given a new life to the retailing in India.
The Retail Reforms – The government has allowed 100 percent FDI in the cash and carry format and 51 percent in the single brand retailing. The International players can also take the routes of Franchise and joint ventures to enter into the Indian Retailing. Over the past few years, a number of companies have entered the country through these routes. Some of the international players that have already entered India include McDonald’s, Pizza Hut, Dominos, Levis, Lee, Nike, Adidas, Benetton etc.
The Road Ahead
According to the Retailing Annual Review published by CRIS INFAC, over the next five years, 73.78 million sq. ft. of the floor space and Rs 369,000 million worth of real estate investment will be required to sustain the growing organised retail market. With Wal-Mart and many other international brands eyeing at the Indian markets, The Indian Retail GAME IS ON.