Retailing in India – Emerging Trends & Potentialities

Topics: Retailing, Shopping mall, Department store Pages: 9 (2675 words) Published: November 14, 2009

Retail is India’s largest industry, accounting for over 10 per cent of the country’s GDP and around eight per cent of the employment. Retail industry in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market.

Retailing in India is gradually inching its way toward becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behaviour, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one roof.

The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector in India. This article reviews the opportunities, emerging trends and potentialities about the booming Indian retail sector.

Current Scenario:
A glimpse of the International Retail:
One of the world's largest industries exceeding US$ 9 trillion •47 global fortune companies & 25 of Asia's top 200 companies are retailers •Dominated by developed countries
US, EU & Japan constitute 80% of world retail sales.
Biggest player in India is Pantaloon Retail India Limited.

Percentage of Organized Retail
USA - 85%
Taiwan - 81%
Malaysia - 55%
Thailand - 40%
Brazil - 36%
Indonesia - 30%
Poland - 20%
China - 20%
India - 3%

Retailing – Indian scenario:
The retail sector in India is highly fragmented and organised retail in the country is at a very nascent stage accounting to only 3% of total organized retail across the world. In India, the retail sector is the second largest employer after agriculture. The Indian retail is one of the biggest industries with a turnover of around $180 bn. Globally India has the highest absolute number and the highest per capita number of retail outlets. With an estimated 11.2 mn outlets, India has the largest retail outlet density in the world. According to a survey, an overwhelming proportion of the $180 bn retail market is unorganised. India ranks first, ahead of Russia, in terms of emerging market potential in retail and is deemed as "Priority 1" market for international retail.

Retailing – FDI:
FDI in retail is at present not allowed in India. FDI in retail must result in backward linkages of production and manufacturing and spur domestic retailing as well as exports. The opening up of retail to FDI would be designed in such as way that many sectors- including agriculture, food processing, manufacturing, packaging and logistics -- reap benefits. It is understood that the multinationals that the invest in retail business in India would also source Indian goods for their international outlets in a big way and thus provide a boost to Indian exports. Indian retail chains would get integrated with global supply chains since FDI will bring in technology, quality standards and marketing. According to the World Bank, opening the retail sector to FDI would be beneficial for India in terms of price and availability of products. Experience everywhere has shown that retailing tends to have a major controlling effect on inflation because large organized retailers are able to buy directly from producers at most competitive prices. FDI will provide a big boost to food products_ including vegetables, fruits and infrastructure.

Similarly, textiles and garments, leather products, etc., will benefit from large scale procurement by international chains. This, in turn, will create more jobs at various levels.

The international players currently in India include McDonald’s Pizza Hut,...
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