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Consumer Markets

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Consumer Markets

May, 2011

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 January 2011. “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 PiyushMathur, Managing Director, South Asia, The Nielsen Co. With 131 index points, India ranked number one in the recent round of the survey, followed by Philippines (120) and Norway (119).

According to recent reports, the Indian consumer sector is attracting more interest from both private equity (PE) and mergers and acquisitions (M&A).

The total M&A and PE (including qualified institutional placement (QIP)) deals in Q1, 2011 were valued at US$ 20.56 billion as compared to US$ 19.87 billion in the corresponding quarter of 2010, according to the Quarter 1, 2011, Deal Snapshot released by Grant Thornton India.


The BMI India Retail Report for the second-quarter of 2011 released forecasts that the total retail sales will grow from US$ 395.96 billion in 2011 to US$ 785.12 billion by 2015. The highly optimistic forecast is based on strengthened economic growth, population expansion; the increasing wealth of individuals and the rapid construction of organised retail infrastructure.

Moreover, India has been ranked as the third most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm, according to A T Kearney in its 9th annual Global Retail Development Index (GRDI) 2010.

Within Asia, India is expected to account for the third largest share at US$ 2.7 billion in 2015, according to a report released by research firm Ovum on January 12, 2011. JaroslawKnapik, Ovum's senior analyst noted in the report that China and India will see the fastest growth rates.

Cumulative foreign direct investment (FDI) inflows in single-brand retail trading during April 2000 to February 2011 stood at US$ 128.34 million, according to the Department of Industrial Policy and Promotion (DIPP).

Organised retail in India is expected to increase from 5 per cent of the total market in 2008 to 14-18 per cent and reach US$ 450 billion by 2015, according to a McKinsey & Company report titled 'The Great Indian Bazaar: Organised Retail Comes of Age in India'.

Furthermore, according to a report titled 'India Organised Retail Market 2010', published by Knight Frank India, during 2010-12 around 55 million square feet (sqft) of retail space will be ready in Mumbai, national capital region (NCR), Bengaluru, Kolkata, Chennai, Hyderabad and Pune. Besides, between 2010 and 2012, the organised retail real estate stock will grow from the existing 41 million sqft to 95 million sq ft.

Driven by the growth of organised retail coupled with changing consumer habits, food retail sector in India is set to be more than double to US$ 150 billion by 2025, according to a report by KPMG.

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.

US-based LED manufacturer Lighting Science Group, a global leader in its business, plans to enter the Indian market by September with an eye to grab 20 per cent share of the market over three years.

Quick food service restaurant chain Subway has said it will set up 45 outlets across the country by 2011-12 entailing investment of US$ 8.95 million.

With the launch of its first 'Arvind Experience Store' in Gujarat at Vadodara, denim major Arvind Ltd. is eyeing 100 stores by the end of the financial year 2011-12. The store in Vadodara is the company's eighth in the country after seven stores in Andhra Pradesh.

LG, the consumer durables major, plans to expand in the information technology (IT) segment with a string of products. At the moment, it has only personal computer (PC) monitors in its portfolio. It will introduce more products such as laptops and printers.

Max Hypermarkets, the food retailing chain of the Dubai-based Landmark Group is investing US$ 123 million for its store expansion business across 30 cities in India.

Ujala fabric whitener maker Jyothy Laboratories has bought Henkel AG's majority stake in its Indian subsidiary for US$ 138 million, including debt and preference shares.The deal includes Henkel's entire portfolio that includes Henko and Chek detergents, Pril dish cleaners and Fa deodorant, and rights to the multinational's future launches.