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September, 2012

India has emerged as the fifth most favourable destination for international retailers, outpacing UAE, Russia, Indonesia and Saudi Arabia, according to A T Kearney's Global Retail Development Index (GRDI) 2012. "India remains a high potential market with accelerated retail growth of 15-20 per cent expected over the next five years," highlighted in the report.

While releasing a report on emerging trends in retail, Mr Rachna Nath, Executive Director, India Leader for Retail and Consumer, PricewaterhouseCoopers (PwC) said, “Over 50 per cent of retail CEOs we spoke to, for our annual global survey, believe the emerging markets, especially India, are their best bet.” The Indian retail industry is pegged at US$ 500 billion and is expected to reach US$ 1.3 trillion by 2020. In addition, the organised retail is expected to reach 25 per cent by 2020, as per the report.

Market Size

  • The foreign direct investment (FDI) inflows in single-brand retail trading during April 2000 to June 2012 stood at US$ 42.70 million, according to the latest data released by Department of Industrial Policy and Promotion (DIPP)
  • Cash and carry represents an opportunity worth around Rs 8,250 billion (US$ 149.19 billion) of the Rs 27,500 billion (US$ 497.29 billion) annual retail business in India


Online retail business is another format which has high potential for growth in the near future. India's e-retail industry is likely to touch Rs 7,000 crore (US$ 1.26 billion) by 2015, up from Rs 2,000 crore (US$ 361.66 million) currently, as per an industry body report.

  • The Russian company ru-Net has become the first foreign company to invest in an Indian online retail company. The Moscow-based internet and technology investment company has invested Rs 95.2 crore (US$ 17.22 million) in Freecultr and BeStylish, two e-commerce websites backed by the Smile Group
  • Virtual trial room is a new concept and e-commerce players in India are looking at it seriously. Using a web-camera, users are able to click pictures of themselves and then click on a product, which is then fitted on to their bodies. Zovi.com launched the first ever virtual trial room in India

Retail in Rural India

Rural chains in India are focussing on hinterlands in a big way. For many companies, a large portion of their revenues comes from rural sales.

  • Fast moving consumer goods (FMCG) major, Emami Ltd has stated that its rural market focus is pushing the sales of the company. Rural marketing through direct channel contributes about 23 per cent of the firm's total sales, which it expects to increase to more than 35 per cent in the next three years. "Emami accelerated product ruralisation. As a result, the direct rural reach grew substantially in 2011-12 and now contributes about 23 per cent of total sales," Mr R S Agarwal and Mr R S Goenka highlighted in its annual report. Emami had also increased its direct retail coverage from 450,000 outlets in 2010-11 to 500,000 outlets in 2011-12
  • India's franchise market is growing at a healthy pace with tier II and tier III 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 US$ 4 billion," according to Mr Gaurav Marya, President, Franchise India
  • Philips plans to develop healthcare products for rural India, a shift away from its exports–led strategy of the previous years. Going forward, the quantum of products developed for the Indian markets will go up "exponentially" and the team "will churn out more products for rural India," as per Mr Srinivas Prasad, Head of Healthcare at Philips Innovation Centre