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Indian Retail Industry Analysis

August, 2019

The Indian retail industry is one of the fastest growing in the world. Retail industry reached to Rs 66.39 lakh crore (US$ 950 billion) in 2018 at CAGR of 13 per cent and expected to reach Rs 76.87 lakh crore (US$ 1.1 trillion) by 2020.

India is the fifth largest preferred retail destination globally. The country is among the highest in the world in terms of per capita retail store availability. India’s retail sector 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. Healthy economic growth, changing demographic profile, increasing disposable incomes, urbanisation, changing consumer tastes and preferences are the other factors driving growth in the organised retail market in India.

The modern retail market in India is expected to grow from Rs 94,421 crore (US$ 13.51 billion) in 2016 to Rs 1.86 lakh crore (US$ 26.67 billion) in 2019.

India’s population is taking to online retail in a big way. Online retail sale is forecasted to grow at the rate of 31 per cent to reach Rs 2.28 lakh crore (US$ 32.70 billion) in 2018@. Revenue generated from online retail is projected to grow to Rs 4.19 lakh crore (US$ 60 billion) by 2020. Organised retail penetration is expected to increase to 18 per cent in 2021 from an estimated nine per cent in 2017. India is expected to become the world's third-largest consumer economy, reaching Rs 27.95 lakh crore (US$ 400 billion) in consumption by 2025. ^Increasing participation from foreign and private players has given a boost to Indian retail industry. India’s price competitiveness attracts large retail players to use it as a sourcing base. Global retailers such as Walmart, GAP, Tesco and JC Penney are increasing their sourcing from India and are moving from third-party buying offices to establishing their own wholly owned/wholly managed sourcing and buying offices. India’s retail sector investments doubled to reach Rs 1,300 crore (US$ 180.18 million) in 2018.* Revenue of India’s offline retailers, also known as brick and mortar retailers, is expected to increase by Rs 10,000-12,000 crore (US$ 1.39-2.77 billion)^ in FY20.

The Government of India has introduced reforms to attract Foreign Direct Investment (FDI) in retail industry. The government has approved 51 per cent FDI in multi-brand retail and 100 per cent in single brand retail under the automatic route which is expected to give a boost to ease of doing business and Make in India, and plans to allow 100 per cent FDI in e-commerce. Cumulative FDI inflow in retail between April 2000 to March 2019 stood at Rs 11,601 crore (US$ 1.66 billion).

India will become a favourable market for fashion retailers on the back of a large young adult consumer base, increasing disposable incomes and relaxed FDI norms.

Notes: ^ - According to a study by Boston Consulting Group,@- According to eMarketer, E – Estimated, * - according to Anarock Retail


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