Estimated to be worth more than US$ 500 billion, the Indian retail industry is considered as one of the world’s top five retail markets in terms of economic value. The industry is experiencing exponential growth, with retail development taking place not just in major cities and metros, but also in Tier-II and Tier-III cities.
India's strong growth fundamentals along with increased urbanisation and consumerism have opened up immense scope for retail expansion. Further, easy availability of Debit/ Credit cards has contributed significantly to a strong and growing online consumer culture in India. With the online medium of retail gaining more and more acceptance, there is a tremendous growth opportunity for retail companies, both domestic and international. Currently, the online retail penetration in India stands at around 60 per cent, according to a report by an industrial body.
“India has a young, well-educated and professional population, core customers. It has a very good market. We chose to be in India before China,” as per Mr Jonathan D Caplan, President and Chief Executive, Genesco Inc.
The Indian retail market is expected to touch US$ 1.3 trillion by 2020 from its existing level of around US$ 500 billion, according to Mr KV Thomas, Union Minister for Food and Consumer Affairs.
The foreign direct investment (FDI) inflows in single-brand retail trading during the period April 2000– September 2013 stood at US$ 97.29 million, as per data released by Department of Industrial Policy and Promotion (DIPP).
India’s urban population has contributed immensely to the growth of the online market in the country. Around 30–40 per cent of the total retail in India’s top 75 cities is expected to be carried out online in the next 7–10 years, as per Mr Arvind Singhal, Chairman and Founder, Technopak Advisors.
With rural India getting increasingly empowered with all forms of technology, online portals are going to be vital for companies trying to access these markets. Of the total online market products, consumer durables account for 34 per cent, apparel and accessories 30 per cent, books 15 per cent, beauty and personal care 10 per cent, and home and furnishing 6 per cent. Over 50 per cent of sales in these product categories take place in non-metro cities.
The growing online retail market has become a very lucrative business for international majors as well. Amazon, the world’s biggest internet retail company, has seen potential in the Indian market. In June 2013, India became only the tenth market where Amazon has established a country-specific retail website.
Moreover, online fashion retailer Jabong has an exclusive partnership with Spanish casual clothing brand Desigual. Many offline brands are also launching their new products first on the online portals, as in the case of Lee Cooper which placed its Originals Frames and Sunglasses range on the online portal Snapdeal earlier this year.