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Retail Scenario in India : Touching Meteoric Scales
As the corporates the Piramals, the Tatas, the Rahejas, ITC, S.Kumars, RPG Enterprises,
and mega retailers- Crosswords, Shoppers Stop, and Pantaloons race to revolutionize the
retailing sector, retail as an industry in India is coming alive.
Retail sales in India amounted to about Rs.7400 billion in 2002, expanded at an average
annual rate of 7% during 1999-2002. With the upturn in economic growth during 2003,
retail sales are also expected to expand at a higher pace of nearly 10%. Across the country,
retail sales in real terms are predicted to rise more rapidly than consumer expenditure
during 2003-08. The forecast growth in real retail sales during 2003- 2008 is 8.3% per
year,
compared with 7.1% for consumer expenditure. Modernization of the Indian retail sector
will be reflected in rapid growth in sales of supermarkets, departmental stores and
hypermarts. Sales from these large-format stores are to expand at growth rates ranging
from 24% to 49% per year during 2003-2008, according to a latest report by Euromonitor
International, a leading provider of global consumer-market intelligence.
A. T. Kearney Inc. places India 6th on a global retail development index. The country has
the highest per capita outlets in the world - 5.5 outlets per 1000 population. Around 7% of
the population in India is engaged in retailing, as compared to 20% in the USA.
In a developing country like India, a large chunk of consumer expenditure is on basic
necessities, especially food-related items. Hence, it is not surprising that food, beverages
and tobacco accounted for as much as 71% of retail sales in 2002. The share of
food-related items had, however, declined over the review period, down from 73% in
1999. This
is not unexpected, because with income growth, Indians, like consumers elsewhere, have
started spending more on non-food items compared with food products. Sales through
supermarkets and department stores are small compared with overall retail sales.
Nevertheless, their sales have grown much more rapidly, at almost a triple rate (about 30%
per year during the review period). This high acceleration in sales through modern
retailformats is expected to continue during the next few years, with the rapid growth in
numbers of such outlets due to consumer demand and business potential.
The factors responsible for the development of the retail sector in India can be broadly
summarized as follows:
Rising incomes and improvements in infrastructure are enlarging consumer markets and
accelerating the convergence of consumer tastes.
