According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, Indian retail industry is the most promising emerging market for investment. In 2007, the retail trade in India had a share of 8-10% in the GDP (Gross Domestic Product) of the country. In 2009, it rose to 12%. The share of organized sector in 2007 was 7.5% of the total retail market.
Also, more and more companies are willing to invest in India due to significant growth forecasts based on:
1. The fact that two-thirds of the country’s population is below 35 years of age and more than 50% of the country comprises middle class consumer which adds to the willingness to consume. According to Business Monitor International middle and upper class consumer base has set vast opportunities in India’s tier-II and tier-Ill cities.
2. The growth of well-travelled Indians coupled with huge media exposure is creating new needs in the minds of consumers. Improved mobility and better tourism has made Indian consumers to demand more.
3. Indians natural tendency to experiment with modern concepts without losing out on traditional behaviour.
4. The greater availability of personal credit has significantly contributed to growing demand for cars, houses, and white goods.
5. India is showing good growth rate in terms of gross domestic product (GDP). An agency predicts average annual GDP growth of 7.6 per cent through 2015. Growth means more income and greater availability of things which retailers distribute and make available.
6. Entry of large diversified business houses into retail has created a plethora of new and modern retail offering to the consumers.
7. Possibility of FDI in multiband retail and the recent opening up of single brand retail is surely leading to diversified brand offerings to consumers and high competition for retailers. More and more of foreign companies want to establish their stores in India.
8. The creation of malls across the country and new high streets has suddenly urged traditional retailers to modernise themselves or take risk, otherwise they will be outdated. Development of retail is happening across tier 1, tier 2 and tier 3 towns and this makes chain store retail interesting.
9. Technology including technology for more sophisticated logistics, retail systems, new payment mechanisms including mobile payments, sophisticated Customer Relationship capabilities and social media allows for consumers to experiment with multichannel shopping.
The government’s aim to introduce GST (Goods and Services Tax) will also bring in entirely new logistics system in the country which would structure stocking points based on transportation and not based on tax impact on goods. This would create a new level of optimised stock availability across the supply chain.
Small and regional brands are tying up with retail giants to push their merchandise, as middle class Indians shift from mom-and pop stores to the comfort and variety of modern retail. Baidyanath Ayurved Bhawan will use Future Supply Chain’s network to sell its ayurvedic medicines, tonics, hair oils and toothpastes on more than 2000 outlets in the country. Future Supply Chain serves several large retailers besides the parent group’s Big Bazaar.
10. Retailing is a big source of employment in India.