According to a McKinsey Global Institute (MGI) study titled 'Bird of Gold': The Rise of India's Consumer Market, the total consumption in India is likely to quadruple making India the fifth largest consumer market by 2025. Urban India will account for nearly 68 per cent of consumption growth while rural consumption will grow by 32 per cent by 2025.
India ranks first in the Nielsen Global Consumer Confidence survey released in October 2010. “India is one of the fastest growing markets in the world and the current consumer belief that recession would soon be a thing of the past has filled Indians with confidence,” said Piyush Mathur, Managing Director, South Asia, The Nielsen Co. With 129 index points, India ranked number one in the recent round of the survey, followed by Thailand (117) and Australia (115).
According to recent reports, the Indian consumer sector is attracting more interest from both private equity (PE) and mergers and acquisitions (M&A).
“This heightened level of PE interest is evidenced by three PE deals which have happened in the consumer space in quick succession in the last few months — Henderson Equity Partners' investment in Genesis Colors, IL&FS' private equity investment in The Mobile Store and investment by Bain Capital & TPG Growth in Lilliput Kidswear,” said Ajay Arora, Partner, Transaction Advisory Services, Ernst & Young.
The BMI India Retail Report for the first-quarter of 2011 released forecasts that the total retail sales will grow from US$ 392.63 billion in 2011 to US$ 674.37 billion by 2014. The highly optimistic forecast is based on strengthened economic growth, population expansion; the increasing wealth of individuals and the rapid construction of organized retail infrastructure.
Moreover, India has been ranked third among the most attractive nations for retail investment among 30 emerging markets by the US-based global management consulting firm A T Kearney in its ninth annual Global Retail Development Index (GRDI) 2010.
Cumulative foreign direct investment (FDI) inflows in single-brand retail trading during April 2000 to October 2010 stood at US$ 197.04 million, according to the Department of Industrial Policy and Promotion (DIPP).
Consultancy firm Technopak has said that 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. Raghav Gupta, President, Technopak, observed that the country's modern consumption level will double within five years to an annual figure of US$ 1.5 trillion from the present level (taking 2010 as the reference year) of US$ 750 billion.
Bharti retail has enhanced its position in Northern India by opening 59 stores in 2010; Bharti-Walmart is expected to open 10-15 wholesale locations by 2013. Marks and Spencer is also contemplating on new stores in next few years.
Future Group has set up a unique community-family shopping center in Bangalore. The retailer is also planning to add 10-15 new private labels in its range of brands.
In order to tap the growing opportunity in the segment, Aditya Birla Retail plans to invest up to US$ 44.34 million in 2010-11 to expand its 'More' brand. The group will open 100 new supermarkets of 'More' and 8-10 new hypermarkets under the More Megastore brand.
The Raheja Group promoted department store chain, Shoppers Stop has lined up investments worth US$ 54 million to open 25 more stores in the next four years, as demand for lifestyle products picks up.
Besides penetrating deeper into metros where it already has a presence, Shoppers Stop will enter eight new cities such as Bhopal, Vijayawada and Siliguri, among others, said Govind Shrikhande, Chief Executive, Shoppers Stop Ltd.
Moreover, leading watchmaker Titan Industries Limited announced to invest about US$ 21.83 million for opening 50 premium watch outlets Helios in the next five years to attain a sales target of US$ 87.31 million.
Furthermore, international chains such as Wal-Mart are increasingly looking at India. Wal-Mart Stores Inc, the world's biggest retailer, plans to accelerate its rollout of wholesale stores in India. Raj Jain, Chief of Indian Operations for Arkansas-based Wal-Mart, said the firm now expects to open 10-12 wholesale centres in India over two to three years, from an earlier target of five years, as real estate prices have become more attractive.
The Indian direct-selling industry is likely to see major competition with both domestic and international majors such as Nu Skin, Burlington, Salad Master and Golden Warp planning to start operations in two years.
According to Chavi Hemanth, Secretary General, Indian Direct Selling Association (IDSA), “The Indian market is clearly a growth story in every sphere of economic activity. We receive more than three membership enquiries every week.”
Direct selling firm Tupperware India, known for its storage containers plans to foray into the rural markets in the next two-three years. "We have solid plans for the rural market. We are working on bringing products for rural people as well,” said Asha Gupta, Managing Director, Tupperware India.
Direct selling fast moving consumer goods (FMCG) company, Amway India Enterprises is aiming at a 25 per cent growth to clock US$ 545.7 million by 2012.
The direct selling industry in India pegged at US$ 907.84 million is all set to exceed the US$ 1.54 billion mark by 2012-13.