Retail Is India

Retail is India's largest industry.
It accounts for over 10 per cent of the India's GDP and

around eight per cent of the employment. Retail sector is one of India's fastest growing
sectors with a 5 per cent compounded annual growth rate. India's huge middle class base
and its untapped retail industry are key attractions for global retail giants planning to
enter newer markets. Driven by changing lifestyles, strong income growth and favorable
demographic patterns, Indian retail is expected to grow 25 per cent annually. It is
expected that retail in India could be worth US$ 175-200 billion by 2016.
The organized retail industry in India had not evolved till the early 1990s. Until then, the
industry was dominated by the un-organized sector. It was a sellers market, with a limited
number of brands, and little choice available to customers. Lack of trained manpower, tax
laws and government regulations all discouraged the growth of organized retailing in
India during that period. Lack of consumer awareness and restrictions over entry of
foreign players into the sector also contributed to the delay in the growth of organized
retailing. Foundation for organized retail in India was laid by Kishore Biyani of
Pantaloon Retails India Limited (PRIL). Following Pantaloon's successful venture a host
of Indian business giants such as Reliance, Bharti, Birla and others are now entering into
retail sector.
A number of factors are driving India's retail market. These include: increase in the
young working population, hefty pay-packets, nuclear families in urban areas, increasing
working-women population, increase in disposable income and customer aspiration,
increase in expenditure for luxury items, and low share of organized retailing. India's
retail boom is manifested in sprawling shopping centers, multiplex- malls and huge
complexes that offer shopping, entertainment and food all under one roof.
But there is a flip side to the boom in the retail sector. It is feared that the entry of global
business giants into organized retail would make redundant the neighbourhood kiryana
stores resulting in dislocation in traditional economic structure. Also, the growth path for
organized retail in India is not hurdle free. The taxation system still favours small retail
business. With the intrinsic complexities of retailing such as rapid price changes, constant
threat of product obsolescence and low margins there is always a threat that the venture
may turn out to be a loss making one.
A perfect business model for retail is still in evolutionary stage. Procurement is very vital
cog in the retail wheel. The retailer has to fight issues like fragmented sourcing,
unpredictable availability, unsorted food provisions and daily fluctuating prices as against
consumer expectations of round-the-year steady prices, sorted and cleaned food and fresh
stock at all times.
Trained human resource for retail is another big challenge. The talent base is limited and
with the entry of big giants there is a cat fight among them to retain this talent. This has
resulted in big salary hikes at the level of upper and middle management and thereby
eroding the profit margin of the business. All the companies have laid out ambitious
expansion plans for themselves and they may be hampered due lack of requisite skilled
manpower.
But retail offers tremendous for the growth of Indian economy. If all the above
challenges are tackled prudently there is a great potential that retail may offer
employment opportunities to millions living in small town and cities and in the process
distributing the benefits of economic boom and resulting in equitable growth.
The Retail Sector of Indian Economy is going through the phase of tremendous transformation.
The retail sector of Indian economy is categorized into two segments such as organized retail sector
and unorganized retail sector with the latter holding the larger share of the retail market. At present
the organized retail sector is catching up very fast. The impact of the alterations in the format of the
retail sector changed the lifestyle of the Indian consumers drastically. The evident increase in
consumerist activity is colossal which has already chipped out a money making recess for the retail
sector of Indian economy.
With the onset of a globalized economy in India, the Indian consumer's psyche has been
changed. People have become aware of the value of money. Nowadays the Indian
consumers are well versed with the concepts about quality of products and services. These demands
are the visible impacts of the Retail Sector of Indian Economy.
Since the liberalization policy of 1990, the Indian economy, and its consumers are getting whiff of
the latest national & international products, the with help of print and electronic media. The social
changes with the rapid economic growth due to trained personnels, fast modernization, enhanced
availableness of retail space is the positive effects of liberalization.
The growth factors of the retail sector of Indian economy:
• Increase in per capita income which in turn increases the household consumption
• Demographical changes and improvements in the standard of living
• Change in patterns of consumption and availability of low-cost consumer credit
• Improvements in infrastructure and enhanced availability of retail space
• Entry to various sources of financing
The infrastructure of the retail sector will evolve radically. The emergence of shopping malls are
going steady in the metros and there are further plans of expansion which would lead to 150 new
ones coming up by the year 2008. As the count of super markets is going up much faster than rate
of growth in retail sector, it is taking the lions share in food trade. The non-food sector, segments
comprising apparel, accessories, fashion, lifestyle felt the significant change with the emergence of
new stores formats like convenience stores, mini marts, mini supermarkets, large supermarkets,
and hyper marts. Even food retailing has became an important retail business in the national arena,
with large format retail stores, establishing stores all over India. With the entry of packaged foods
like MTR, ITC Ashirbad, fast foods chains like McDonald's, KFC, beverage parlors like Nescafe, Tata
Tea, Café Coffee and Barista, the Indian food habits has been altered. This stores have earned the
reputation of being 'super saver locations'.
With the arrival of the Transnational Companies(TNC), the Indian retail sector will confront the
following round of alterations. At present the Foreign Direct Investments(FDI) is not encouraged in
the Indian organized retail sector but once the TNC'S get in they would try to muscle out their
Indian counterparts. This would be challenging to the retail sector in India.
The future trends of the retail sector of Indian economy:
• The retail sector of Indian economy will grow up to 10% of total retailing by the year 2010.
• No one single format can be assumed as there is a huge difference in
• cultures regionally.
• The most encouraging format now would be the hypermarts
• The hypermart format would be further encouraged with the entry of the TNC's

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Retail is India's largest industry.

It accounts for over 10 per cent of the India's GDP and

The growth factors of the retail sector of Indian economy:

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