As India surges high with its growth story, the retail sector in the country is bound to come across opportunities like never before. Till a few years back, the retail sector in India was more of an unorganized one with petty vendors dominating the chunk of the industry but now the scenario has fast been changing. Finally, the sector is converting into what we call as organized retailing.
Not only Indian corporate majors like Reliance, ITC and Pantaloon have entered into the segment but more and more foreign players are also showing interest in USD 350 billion Indian retail markets.
Today, we turn around and find huge shopping malls and multiplexes all the way. Perhaps that’s why the retail revolution is said to be spearheading the real estate boom in India. The retail sector boom
While the Indian real estate markets boom with organized retailing, the segment ensures a fluffy growth pad for itself. According to the estimations of KSA-Technopark, a retail consulting and research firm, organized retailing in India will grow three-fold in the next 3-years, achieving the size of USD 21.5 billion from the current one of USD 7.5 billion.
Given the favourable growth patterns, expanding middle class and easing economic policies, India is ranked as the most attractive emerging markets for retail investment, even above Russia and China. Growth Drivers
The Indian middle class
The growth story of Indian retail sector is based primarily on its huge middle class. According to a study undertaken by the National Council for Applied Economic Research (NCAER) “The Growing Indian Middle Class”, the upper middle and high-income urban households in India will touch 3.8 crore by 2007 (from 1.46 crore in 2000).
The sheer size of its upbeat middle class market makes India a happening market place for retail players.
Besides the number advantage, the purchasing power of Indian middle class is also growing substantially with a year-on-year growth rate of 5-per cent in its household income.
According to NCAER, the 9.2 crore strong Indian middle class (whose annual income ranges between Rs 2 lakh and Rs 10 lakh) is expected to cross 15.3 crore by 2009.
Undoubtedly, such healthy trends corroborate that the retail sector boom is here to stay in India on sustained basis. Policy reforms
The Indian government allows 51 per cent Foreign Direct Investment (FDI) in single brand retailing owing to which foreign multinationals like Reebok and Louis Vuitton can now operate directly in the Indian markets instead of going through franchise route of earlier. The Road Ahead
While Indian telecom major Bharti is all set to foray in the retail segment, a number of companies from the US, England and Australia have laid plans to sell their products directly at the retail outlets. As many as 12 Australian food producers have tied up with India-based distributor AB Mauri for the same. World’s largest retailer Walmart is also planning ambitiously to trade in India. With this there lies an exciting times ahead for the Indian retail markets.
|