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The market

  • India is ranked first on the Global retail development index – 2009, conducted by AT Kearney across 30 emerging economies. India is also ranked fourth in the 2009 Retail Apparel Index(as per IBEF, September 2009).
  • India has also been ranked first on the Global consumer confidence index — January 2009, conducted by the Nielsen Company(as per IBEF, September 2009).
  • Indian retail industry size (organized and unorganized) is estimated at around USD 511 billion (FY08)(as per AT Kearney report (http://business.mapsofindia.com/india-market/retail.html).
  • Share of organized retail market has increased from 0.5 percent in 1999 to 5 percent2 in 2008 but continues to remain lower than other countries like Malaysia, Thailand, Brazil and China. However, penetration levels are likely to rise to 9.6 percent by FY12.
  • The industry currently accounts for 12 percent of India’s GDP and in 2008; the retail industry employed over 38 million people in India accounting for 8.5 percent of the total employed population in the country(as per Retailing in India, Euromonitor).

Opportunities:

  • Retail franchising has been growing at the rate of 60 percent in the last 3 years and is set to grow two-fold in the next 5 years.
  • Food and Grocery remains one of the biggest categories of consumer spending (75 percent) but account for only 10 percent of organized retailing, representing a big opportunity for retailers. Wet groceries (fruits, vegetables and meat products) are the most promising category with great untapped potential.
  • There are opportunities in consumer durables segment which currently has 9 percent share of the modern retail is expected to grow to 11 percent by 2013. Home furnishing is another segment which is expected to show a steep rise jumping from 2 percent in 2008 to 9 percent in 2013.
  • Number of shopping malls is expected to increase at a CAGR of more than 18.9 percent from 2007 to 2015.
  • The retail boom which has so far been concentrated in the metros is beginning to percolate down to smaller cities and towns. Rural market is projected to dominate the retail industry landscape in India by 2012 with total market share of above 50 percent.
  • Development of India as a sourcing hub shall further make India an attractive retail opportunity for global retailers. Retailers, such as Tesco, J.C. Penney, etc are stepping up their sourcing.
  • Requirements from India, and moving from third-party buying offices to establishing their own wholly owned/wholly managed sourcing and buying offices.

Industry Snapshot

Size (FY08) USD 511 bn (organized + unorganized)
(as per AT Kearney report (http://business.mapsofindia.com/india-market/retail.html))
Size (FY13 estimated) USD 833 bn
Projected CAGR (FY18) 10 percent
Organized retail (FY13 estimated) USD 107 bn
Value-wise India is fifth largest retail destination globally
Regulatory Current FDI policies allow 100 percent foreign investment only in wholesale cash-n-carry and 51 percent in single-brand retailing
Foreign players sourcing from India Levis-Strauss, Wal-Mart, Nike, Marks & Spencer, Metro AG, etc
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