According to a study by the McKinsey Global Institute (MGI), 'Bird of Gold': The Rise of India's Consumer Market, Indian incomes are likely to grow three-fold over the next two decades and India will become the world's fifth largest consumer market by 2025, moving up from its 2007 position as the world's 12th largest consumer market.
India ranks second in the Nielsen Global Consumer Confidence survey released on January 7, 2010—an indication that recovery from the economic downturn is faster in India with consumers more willing to spend. The survey showed that in addition to the emerging markets of Indonesia and India, eight of the top ten most confident markets in the fourth quarter of 2009 came from the Asia Pacific region.
Estimates by the Retailers Association of India (RAI), the apex body of organised, modern retailers, have shown that the country's US$ 21.05-billion organised retail segment has grown 20 per cent in the September quarter 2009-10.
Approximately 315 hypermarkets are expected to come into existence in Tier-I and Tier-II cities across India by the end of 2011, according to a joint study by consultancy firm KPMG and industry body ASSOCHAM named 'Reinventing India's Retail Sector'.
Consultancy firm Technopak has said the organised modern retail segment in India will grow by over three times during the next five years (from 2010), to reach a figure of US$ 80 billion. Technopak President Raghav Gupta has said that the country's modern consumption level will double within five years (taking 2010 as reference) to an annual figure of US$ 1.5 trillion from the present level of US$ 750 billion.
The hypermarket chain, Big Bazaar, and other retailer such as Raheja-owned Shoppers Stop Ltd and RPG's Spencer's Retail has seen the year 2010 start off with good sales. Big Bazaar raked in US$ 53.4 million at its shopping festival built around the Republic Day in January 2010. Spencer's Retail saw 20-25 per cent year-on-year growth in same-store sales (SSS) in the days around Republic Day, while Shoppers Stop saw its ticket size and average selling price grow 11.8 per cent, in the December 2009 quarter.
Technopak has stated that the main growth in the organised retail market would be driven by the food and grocery segment, followed by the apparels, consumer electronics and footwear segments.
As socio-economic changes sweep across India, the country is witnessing the creation of many new markets and a further expansion of the existing ones. According to Pradeep Kashyap, chief executive officer of MART Rural Solutions, speaking at the Calcutta Management Association Rural Marketing Meet, over 300 million people would move up from the category of rural poor to rural lower middle class between 2005 and 2025 and rural consumption levels are expected to rise to current urban levels by 2017.
Mega retail chains are looking to build a high-quality supply chain—retailers such as Bharti-Wal-Mart, Carrefour and Reliance are working to strengthen their supply chain formula by roping in farmers as stakeholders. Despite being the biggest names in the trade, these retailers are ploughing rural areas to teach innovative farming methods and find the best suppliers among them.
According to a FICCI-Technopak report, despite the economic slowdown, India's fast moving consumer goods (FMCG) sector is poised to reach US$ 43 billion by 2013 and US$ 74 billion by 2018. The report states that implementation of the proposed Goods and Services Tax (GST) and the opening of Foreign Direct Investment (FDI) are expected to fuel growth further and raise the industry's size to US$ 47 billion by 2013 and US$ 95 billion by 2018.
The Ministry of Food Processing Industries is also planning to double the market size of the food processing industry to US$ 165.1 billion by 2009-10 and treble it to US$ 271.8 billion by 2014-15.
Demand for personal care products such as shampoos, toothpastes and hair-oils grew faster in rural areas than urban areas during April-September 2009, a period that includes the peak monsoon months, as per the numbers released by market researcher AC Nielsen.
As of February 5, 2010, results of fast moving consumer goods (FCMG) companies have revealed that most of them have sustained growth in the October-December 2009 quarter which saw average growth in net sales stand at 14 per cent, while net profit posted 24 per cent growth during the same period, according to analysts.