Tuesday, June 16, 2009

Retail scenario in India

Economic liberalization has brought about distinct changes in the life of urban people in India. A higher income group in middle class is emerging in the Indian society. Demographic changes have also made palpable changes in social culture and lifestyle. In this environment Indian Retail Industry is witnessing rapid growth. A.T. Kearney has ranked India as fifth in terms of Retail attractiveness. The industry has got tremendous potential but it also requires sufficient capital flow. Current Foreign Direct Investment policy of Indian Government does not allow any foreign direct investment in this sector however different global retail players are seriously eying on this market.

Industry Characteristics:
Indian Retail Industry is the largest employer after Agriculture (around 8% of the population) and it has the highest outlet density in the world however this industry is still in a very nascent stage. The whole market is mostly unorganized and it is dominated by fragmented Kirana stores. A poor, supply chain and backward integration has weakened the whole process. Organized corporate retailers contribute only a negligible percentage of the overall retail business. Organized and trained Retail workforce is not available in India and the overall skill level is low mainly because of the low maturity level of the Industry.

Business Opportunities
However India can unveil significant business opportunity to the Retailers. Indian retail sector is estimated to have a total market size of $180 Billion. A. McKinsey report on India says, "Organized retailing would increase the efficiency and productivity of entire gamut of economic activities, and would help in achieving higher GDP growth".

The factors responsible for the development of the Retail sector in India can be broadly summarized as follows:

1. Rising incomes and improvements in infrastructure are enlarging consumer markets and accelerating the convergence of consumer tastes. Looking at income classification, the National Council of Applied Economic Research (NCAER) classified approximately 50% of the Indian population as low income in 1994-95; this is expected to decline to 17.8% by 2006-07.

2. Liberalization of the Indian economy which has led to the opening up of the market for consumer goods has helped the MNC brands like Kellogs, Unilever, Nestle, etc. to make significant inroads into the vast consumer market by offering a wide range of choices to the Indian consumers.

3. Also Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.

Major Retail Players in India:


Current turn over (in Crore)



    Shopper Stop

    Life Style











No comments:

Post a Comment