Retail Rising: Untapped Opportunities in Indian Retail

India has emerged as the fifth most favorable destination for international retailers, outpacing UAE, Russia, Indonesia and Saudi Arabia, according to A T Kearneys lobal Retail !evelopment Inde" # R!I$ %&'%( )o*ever, there is a lot more to be done on both fronts before they reach closer to the finish line( +usinesses across sectors have been coming up *ith uni,ue solutions to meet the demands of the Indian mar-et( Retail sector has been no different( Retailers across the country have realised that the consumer is loo-ing for ,uality goods at efficient pricing( Massive Opportunities in Retail in India .actors such as large mar-et si/e, lo* organi/ed retail penetration and increasing personal incomes ma-e India an e"citing and dynamic retail destination( 0ith a mar-et si/e of US1 23& +n in %&'%, the retail mar-et in India is e"pected to be US1 342 +n by %&'3( The retail mar-et in India has gro*n at a compounded annual gro*th rate #5A R$ of 3(6 per cent since '667( 0hile close to 8& per cent of the total mar-et belongs to the food and grocery retail chains, the other broad segments include categories such as clothing and fashion stand at 6(6 per cent( +eauty and *ellness account for 2 per cent, electronics for 8(2 per cent and furniture and furnishings for 9(2 per cent( +ut even at such a robust gro*th rate, the organi/ed retail is :ust a small fraction of the total retail industry in India( At the end of %&'';'%, the share of organi/ed retail stood at 3 per cent share of the total retail mar-et in terms of penetration and the rest 63 per cent is penetrated by the unorganised retailers *ith over '% million mom;and;pop stores( 5learly, there is a huge opportunity for organi/ed retailers to prosper in the Indian mar-et( It is believed that the share of organi/ed retail *ill go up to 6 per cent by the end of %&'3;'8 and %& per cent by the end of %&%&;%'( Banking on the FDI Movement Till no*, .!I up to '&& per cent *as allo*ed for cash and carry *holesale trading and e"port trading under the automatic route, and .!I up to 3' per cent *as allo*ed in single;brand retail, *ith prior government approvals( )o*ever, the 5abinet 5ommittee on Economic Affairs #55EA$ recently permitted .!I up to 3' per cent in multi;brand retailing *ith prior overnment approval and '&& per cent in single brand retailing thus further liberalising the sector( <any global single;brand retail chains have entered into the country forging :oint ventures *ith the local retailers over the past fe* years, the ne* guidelines *ill help them e"pand at a fast pace and *ould speed up the plans of many other retailers, *ho are yet to ma-e their presence felt in the Indian retail mar-et( .oreign multi;brand retailers present in India through cash;and;carry route are e"pected to roll out consumer facing formats in the short to medium term, according to a research paper by consultancy firm K=< ( .!I guidelines in the Indian retail sector are li-ely to create '& million :obs over the ne"t '& years, according to a report from Indian Staffing .ederation #IS.$( The report also mentioned that the ne* :ob opportunities in the sector *ill ma-e it the largest sector in organi/ed employment(

=rima facie, .!I in multi;brand retail *ould benefit capital constrained retailers, accelerating the pace of investment in the supply chain to meet demands of increasing scale and enhancing efficiencies #offering competitive prices$, besides e"pertise of foreign retailers, >= <organ said in a note( India is Building Retail in Profitable E os!stem In order to protect the interest of the small and medium enterprises, the overnment has set up a system *here international retailers *ill push the local businesses by sourcing locally, both for single;brand and multi;brand retail( .or instance, in the case of multi;brand retail, at least 9& per cent of the value of procurement of the manufactured or processed products shall be sourced from Indian small industries #*hich have a total investment in plant and machinery not e"ceeding US1 ' mn$( Similarly, for single; brand retail, the .!I proposals that are loo-ing at investing beyond 3' per cent in the country, should source 9' per cent of the value of goods from India and preferably from small and medium enterprises, villages and cottage industries, artisans and craftsmen in all sectors( "ot a sMall #tor! As far as mall space re,uirement of the country is concerned, India *ill need an additional 23 million s,(ft( of space by %&'9;'2 in cities such as !elhi, <umbai, Kol-ata and 5hennai, according to research from Technopa- advisors and 5ushman ? 0a-efield( In addition, cities such as +engaluru, =une, )yderabad and Ahmedabad *ill re,uire %' million s,(ft( by %&'9;'2( 0hile %' per cent of this space *ill be ta-en up by hypermar-ets, apparel stores *ill account for '6 per cent of the total re,uirement( @ther segments li-e multiple"es, gaming and food court *ill ta-e '2 per cent, departmental stores *ill ta-e '& per cent, restaurants *ill ta-e 7 per cent and super mar-ets *ill ta-e 6 per cent( $he %a! For&ard for Indian Retail The lo* share of organised retail and the huge potential of Indias retail mar-et coupled *ith the rising disposable income ma-e India a destination *hich is tough to miss for any global retailer( 5onsumer mar-ets in emerging economies such as India are gro*ing rapidly o*ing to robust economic gro*th( The retail industry is highly competitive because of ever changing consumer preferences and the need for mar-eting differentiation( #SourceA An article by India +rand E,uity .oundation #I+E.$ in India Retail Report %&'9$