The origins for retail business in India can be traced with the emergence of Kirana stores and mom-and-pop stores. These stores used to cater to the local people. Gradually the government started supporting the rural retail and many indigenous franchise stores came up with the help of Khadi & Village Industries Commission. The economy began to open up in the 1980's resulting in the change of retailing. The first few companies to come up with retail chains were in textile sector, for example, Bombay Dyeing, S Kumar's, Raymonds, etc. Later Titan launched retail showrooms in the organized retail sector. With the passage of time new entrants moved on from manufacturing to pure retailing.
Today India is the fifth largest in the world in terms of Retail Industry. Comprising of organized and unorganized sectors, Indian retail industry is one of the fastest growing industries, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore shortly.
Indian Retail Industry is the most promising emerging market for investment According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, the retail trade in India had a share of 8-10% in the GDP (Gross Domestic Product) of the country in the year 2007. In 2009, it rose to 12% in the year 2008 and expected to reach 22% in the next few years.
The Indian Retail Industry is expected to grow to US$ 700 billion in the year 2010 according to a report by Northbride Capital. In the same year the organized sector will be 20% of the total market share as compared to the share of organized sector in 2007 was 7.5% of the total retail market.
Retail is India's largest industry and for over 10% of the India's GDP and around 8% of the employment. Retail sector is one of India's fastest growing sectors with a 5% compounded annual growth rate. As India has a huge middle class base and its untapped retail industry are key attractions for global retail giants planning to enter newer markets. Due to the changing lifestyles, strong income growth in the middle class population and favorable demographic patterns, Indian retail is expected to grow 25% annually and expected that retail business in India could be worth US$ 175-200 billion by 2016.
The Indian Retail Industry has come forth as one of the most dynamic and fast paced industries with several players entering the market. Today due to Retail business the total concept and idea of shopping has undergone an attention drawing change in terms of format and consumer buying behavior, ushering in a revolution in shopping in the country.
Modern retailing has entered into the country and as is observed in the form of bustling shopping centers, multi-storied malls and the huge complexes that offer shopping, entertainment and food all under one roof. 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 the key factors in the growth of the organized Retail sector in India.
The growth pattern in organized retailing and in the consumption made by the Indian population will follow a rising graph helping the newer businessmen to enter the India Retail Industry.
The Food Retail Industry in India dominates the shopping basket. The Mobile phone Retail Industry in India is already a US$ 16.7 billion business, growing at over 20 %per year. The future of the India Retail Industry looks promising with the growing of the market, with the government policies becoming more favorable and the emerging technologies facilitating operations.
The present value of the Indian retail market is estimated to be around Rs. 12,00,000 crore($270 billion) and the annual growth rate is 5.7%. Retail market for food and grocery with a worth of Rs. 7, 43,900 crore is the largest of the different types of retail industries present in India. Furthermore around 15 million retail outlets help India win the crown of having the highest retail outlet density in the world.
Size of the industry
In the next fe years the organised Retail Sector in India is expected to triple its size. The food and grocery retail sector is expected to multiply five times in the same time frame. The market size of Indian retail industry is about US $312 billion. The organised retailing comprises only 2.8% of the total retailing market and is estimated at around US$ 8.7 billion and the organised retail sector is expected to grow to US $ 70 billion.
In the present scenario, 51% Foreign Direct Investment is permitted in India only through single brand retailing and FDI upto 100% allowed under the automatic route for cash and carry wholesale.
Total contribution to the economy/ sales
In 2010 the retail trade accounts for 12 % of the country's GDP and is expected to approach 22% according to Indian Brand Equity Foundation. Another analysis according to the Mckinsery 'The rise of Indian Consumer Market', foresees the Indian consumer market growing by four times by the year 2025, the Indian Retail industry is worth $300 billion in terms of value. The industry's contribution to the Gross Domestic Product is about 10%, the highest compared to all other Indian Industries.
Top leading Companies
Pantaloon is the most popular and biggest retailers in India with more than 450 stores across the country.Headquartered in Mumbai, it has more than 5 million sq. ft retail space located across the country.It has the following retail segments:
Food & Grocery: Big Bazaar, Food Bazaar
Home Solutions: Hometown Furniture Bazaar
Consumer Electronics: e-zone
Shoes: Shoe Factory
Books, Music & Gifts: Depot
Health & Beauty Care: Star, Sitara
Entertainment: Bowling Co.
Tata group established in 1998 is another major player in Indian retail industry with its subsidiary Trent, which operates Westside and Star India Bazaar. The group also has acquired the largest book and music retailer in India 'Landmark' in 2005. Trent owns over 4 lakh sq. ft retail space across the country.
RPG Group is one of the earlier entrants which were started in the year 1996 in the Indian retail market, with the food & grocery retailing. Later it also opened the pharmacy and beauty care outlets 'Health & Glow'.
Reliance is one of the biggest gaint players in Indian retail industry. More than 300 Reliance Fresh stores and Reliance Mart are quite popular in the Indian retail market. It is expected that in the year 2010 its sales would reach to Rs. 90,000 crores.
AV Birla Group
AV Birla Group has a strong presence in Indian apparel retailing with brands like Louis Phillipe, Allen Solly, Van Heusen, Peter England are quite popular.
Other popular brands are Archies, Bata India Ltd, Big Bazaar, Crossword, Ebony Retail Holdings Ltd., Fabmall, Food Bazaar, Globus Stores Pvt. Ltd., Health and Glow, Liberty Shoes Ltd., MTR Foods Ltd., Music World Entertainment Ltd., Pantaloon Retail India Ltd., Shoppers Stop, Style SPA Furniture Ltd, Subhiksha, Titan Industries, Lifestyle, etc.
New entrants entering the market soon will be Reliance Retail Ltd, Wal-Mart Stores, Carrefour, Tesco, Boots Group, etc.
The retail sector has also contributed to 8% of the employment in the country. Indian Retail Industry would generate employment for more than 2.5 million people, predicts an analysis by Ma Foi Management Consultants Ltd. Today the modern retail/retail services sector has the potential of creating over 2 million new (direct) jobs within the next 6 years in the country (assuming only 8-10% share of organized retailing), according to various analysts. Retail can create as many new jobs as the BPO/ITES sector in India. A strong retail front-end can also provide the necessary fillip to agriculture & food processing, handicrafts, and small & medium manufacturing enterprises, creating millions of new jobs indirectly. Through its strong linkages with sectors like tourism and hospitality, retail has the potential of creating jobs in these sectors also.
The BMI India Retail Report analysis for the third-quarter of 2010, forecasts that the total retail sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014. With the expanding and developing middle and upper class consumer base, there will also be opportunities in India's tier II and III cities. Their would be greater availability of personal credit and a growing vehicle population to improve mobility also contribute to a trend towards annual retail sales growth of 11.4%. Further analysts predict that sales through MGR outlets will increase by 154% to reach US$ 15.29 billion by 2014.
India today continues to be among the most attractive countries for global retailers. Foreign direct investment (FDI) inflows between April 2000 and 2010, according to the Department of Industrial Policy and Promotion in single-brand retail trading, stood at US$ 194.69 million.
In 2010 China and India are predicted to account for almost 91% of regional retail sales and in the year 2014 their share of the regional market is expected to be more than 92%.
Worldwide Partner Inc are the Ninth largest global network of more than 90 marketing and communiation agencies in about 50 countries which has recently tied up with Indian Pressman Advertising and Marketing Ltd following repeated enquires about India.
The retail industry in India is currently growing at a great pace and is expected to go up to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone up and is also expected to go up further in the future.
- In the last four year, the consumer spending in India climbed up to 75%. As a result, the India retail industry is expected to grow further in the future days. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%.