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Indian Retail Industry Essay

3441 words - 14 pages

OVERVIEW
India is the fifth largest retail market globally, with a size of INR 16trn, and has been growing at 15% per annum. Organized retail accounts for just 5% of total retail sales and has been growing at 35% CAGR. Though the journey has so far been rather mixed, organized retail is being tipped as one of the biggest gainers from growing consumerism and rising income. India’s robust macro and microeconomic fundamentals, such as robust GDP growth, higher incomes, increasing personal consumption, favourable demographics and supportive government policies, will accelerate the growth of the retail sector.

1) Learning from the Past: During2005-2007, the sector was in a hyper growth ...view middle of the document...

Store additions accelerating
iv. Policy resolutions are potential upside triggers FDI, GST, APMC Act, etc.
4) Critical Issues in Indian Retail: During the global slowdown phase of 2007 - 2009, the Indian retail players paused to realize their past mistakes and took time and effort to re-organize themselves:
* Focus on profitable growth
* Exit from unprofitable stores/formats
* Rental renegotiation/revenue sharing arrangements
iv. Reduction in salaries/higher man power productivity
* Significant investments in backend
* Exit of unsuccessful new entrants Industry also witnessed failures like Subhiksha and Vishal Retail with many other existing players still trying to fine tune their operations

INDIA’S EVOLUTION TO THE GROWTH

With the boom of the service sector and increased industrial output, the growth pace has spiralled in the last decade. This has set a sustainable platform for consumerism and rising per capita spend leading to an inclusive growth

Indian Retail Sector –Quick Facts |
Market Size | INR 15.5 trn |
Organized Retailpenetration | 5-8 % |
UnorganizedRetail market | 12 million Kiranas |
Growth rate | 15-20% |
Retaildensity | 6 % |

Retailing Industry in India is estimated at INR 15.5 trillion growing at CAGR of 15 to 20 %....
Organized Retail accounts for 5-8% which is lowest compared to its peers in BRIC countries –Brazil (38%), Russia (33%) and China (20%)
The Organized Retail has been growing at 35% CAGR
The retail and wholesale sector in India accounts for approx 14% of GDP
In terms of employment, the sector is second largest employer providing over 10% of all formal jobs

SUPPORTED BY STONG ECONOMIC FUNDAMENTALS
India has witnessed a robust growth rate of 9% p.a. from 2005 to 2008 and an impressive growth of 6.7% in 2009 despite the global downturn

Government is committed to encourage inclusive growth

72.2% of India’s population resides in rural areas. High agriculture growth rate offers huge potential

Households forming ‘rich class’ have grown at CAGR of 35% during and that of ‘Major consuming class’ have grown at a CAGR of 11 %

One of the most challenging, dynamic and exciting Indian Retail sector has led most global retailers look towards India to grow and access new customers

TheproposedFDInormswillopenupstrategicinvestmentopportunityforglobalretailerswhohavebeenwaitingtoinvestinIndia.Thismayhaveasignificantimpactonthecurrentarrangementofforeignplayers
0 •Somekeynormsanditsimplicationsare:Thepolicywillrequireinvestmentfromretailersinareaofsupplychain,especiallyforperishableproducts,thushelpingfarmerstogetbetterincomeleadingtoaninclusivegrowthinthecountry
1 GiventhelargenumberofSKU’sthatretailersstockSmallandMediumEnterprises(SME)sectorisalsosettogainfromthismoveduetopreferencegivenbyretailerstoprivatelabelbrands
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