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Retail Industry Landscape And Trends in India


Post liberalization Indian economy has been traversing boundaries and growing at a pace never seen before. Right demographics with 81 percent below 45 years age group along with significantly improved ability to earn and also the propensity to spend have been the driving force for the growth of the Indian retail industry along with benevolent macroeconomic conditions. The Indian consumer has also evolved significantly over the past decade. The new image of an average Indian consumer today is a rich, young consumer who aspires to get great the best value for their hard earned money. This new consumer is at the center of the today’s organized retail industry. To cater to the needs of this consumer many sprawling shopping centers, multi-storied malls and huge complexes that offer shopping, entertainment and food under one roof have been built in the past five years in the major Indian cities. About 400 new malls, 1,500 supermarkets and 350 departmental stores are currently being built in various Indian cities. In addition to just giving value to the Indian consumer and just building supermarkets, the organized retailers need to be prepared for a quick scale up across dimensions of people, processes and technology.


The Indian Retail Industry Overview

The GRDI position for India is at number three with China and Kuwait having caught up with us in the race but still in the last two years India has witnessed an explosion of organized retail formats in the otherwise Fragmented Indian retail market. There are nearly 15 million retail outlets, which makes India the highest retail outlet density in the world. India is the most attractive market for global retailers to enter. The growth of the retail trade in India is associated with the growth in the Indian economy. Gross domestic product (GDP) grew by an annual rate of 6.6 per cent during 1994-00 but the growth slackened to 4.7 per cent per annum during the next three years the growth remarkably rose to 8.7 per cent per annum till 2010. The income of the consumers also has shown a rise since 1999 and this pattern can be observed and associated in the Retail sales as well. The local retail sector has grown by 10% on an average in the past five years.

There are two key formats of retail in India the Unorganized or conventional or traditional retail and organized or modern retail formats. Key Retail Formats in India The conventional retail dominated the Indian market for a long time this format includes retailers consisting of kirana shops, general stores, chemists, footwear shops, apparel shops, paan and beedi shops, hand-cart hawkers, pavement vendors, etc. The modern Organized Retail have come up in many formats in metros and other important cities. They are usually chain stores, all owned or franchised by a central entity.

Key Trends The organized retail sales grew to 20 per cent per annum from Rs. 350 billion in 2003-04 to Rs. 598 billion in 2006-07. Food and grocery was the main bulk of Indian retailing earlier and its share was about two thirds in 2003-04 gradually falling to about 60 per cent in 2006-07. Clothing and footwear, which had the market share of about 7 % in 2003-04 and it rose to 9 per cent in 2006-07. Furniture, furnishing, appliances and services, share rose from about 5 per cent in 2003-04 to 7 per cent in 2006-07. Jewellery, watches, etc. constituted about 6 per cent of total Indian retailing in 2006-07, rising from 5 per cent in 2003-04.

Contributing Author: Vijayalakshmi Ravi, [email protected]





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