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Retail

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Retail

March, 2012

Introduction

The retail industry in India gathered a new momentum with the establishment of different international brand outlets, hyper or super markets, shopping malls and departmental stores.

The organised retail segment in India is projected to be 9 per cent of total retail market by 2015 and 20 per cent by 2020. Hypermarkets would be the largest retail segment, accounting for 21 per cent of the total retail space by 2013–14.

India has one of the largest number of retail outlets in the world. The retail sector is experiencing exponential growth, with retail development taking place not just in major cities, but also in Tier-II and Tier-III cities. India's growing population and urbanisation provides a huge market for organised retail. Growing economic prosperity and transformation in consumption pattern drives retail demand.

India ranks fourth among the 30 countries that were surveyed in Global Retail Development Index and ranked sixth in the 2011 Global Apparel Index.

Market Size

The BMI India Retail Report for the fourth quarter of 2011 forecasts that total retail sales will grow from US$ 411.28 billion in 2011 to US$ 804.06 billion by 2015. Robust economic growth, population growth, the increasing wealth of individuals and the speedy construction of organised retail infrastructure are key factors behind the forecast growth. As well as an expanding middle and upper class consumer base, there will also be opportunities in India's Tier-2 and Tier-3 cities. The greater availability of personal credit and a growing vehicle population providing improved mobility also contribute to a trend of 11.9 per cent annual retail sales growth. Tourism is also a major contributor to the Indian retail sector.

The country's franchise market is growing at a healthy pace of over 30 per cent per annum with Tier-2 and Tier-3 cities gradually getting attracted to the network of retailers and franchisers.

"Franchising in India has witnessed impressive growth of around 30-35 per cent year-after-year over the last 4-5 years with an estimated turnover of $4 billion. It is helping transform good ideas into businesses. The FRO serves as a platform to identify, foster and commercialise innovative business start-up ideas and to meet the demands of today's dynamic entrepreneurial arena." according to Gaurav Marya, President, Franchise India.

E-tailing

As online retailing surges on the back of customer incentives and product discounts, brick and mortar chain stores like Shoppers Stop Ltd, Lifestyle International (P) Ltd and The Bombay Store are reworking their internet strategies to compete with e-tailers such as flipkart.com. Moreover companies like watchmaker Titan Industries Ltd and Lifestyle, which had no presence in the e-tailing space, are also in the process of creating a niche in the e-tailing space.

Similarly, futurebazaar.com—the e-commerce venture of the Kishore Biyani-led Future Group—has started selling the full range of merchandise available in its retail stores. A year-and-a-half ago they relaunched their website as a deal site and further tweaked its online strategy to include multiple categories as it plans to establish itself as a serious online destination for shoppers.