Retail set to Grow in India

What promises does the year 2010 hold for Indian retail?

The time of discount growth trends in retail seem to have ended with heavy footfalls being the recurring theme across the past couple of months amidst reports of higher volume sales across different regions. Indian retail appears all set to achieve success by the end of the year 2010. It is a feeling that is doubly sweet; coming at it does after a year when the global economic slowdown hogged headlines with the impact being felt in the Indian economy as well.

From developers to retailers branded chains to premium labels. All seem to be looking at year of success especially in light of the favorable business environment following market sentiment turning positive towards the end of 2008.

The industry had been especially affected in the first half of 2009 by various factors including slowing economic growth, high interest rates and the liquidity crunch, which together put pressure on discretionary consumer expenditure

The Fitch Ratings report for the year 2010 suggest the Indian Retail’s long term growth outlook will remain solid due to positive economic factors which include strong GDP growth higher disposable incomes, an increase in the proportion of higher income households, which represents a positive demographic shift, as also greater acceptability of organized retail in smaller cities and towns as well.

As per industry estimates modern retail (organized retail) which accounts for 5 percent of the total retail market, is expected to grow at compound annual growth rate (CAGR) of 40 percent from less than US $20 bn to US $75 bn by 2015.

Growth opportunities are expected to be witnessed in rural retailing, E- retailing and Retail Franchising by the end of the 2010. While opportunities exist amongst these options, implementing these requires standardization of processes as well as identification of early entrepreneurs. Further a strong legal framework is called for to protect the process and concept. Given this, expectations are that there will be growth –albeit to a slow pace in these.

What would be the best example of retail infrastructure in India, moving into 2010? A few select developers in the country (including prozone) are trying to set examples of high quality retail infrastructure development. Going by what is expected in 2010, in the coming years we shall find it easier to state many examples that the world retail community shall look up to.

India today is a dynamic combination of demanding consumers, rising levels of consumption and a growing population base. It has emerged as the fourth largest economy in the world in terms of Purchasing Power Parity (PPP) and is expected to rank third by 2010, after the US and China. According to the Global Retail Development Index (GRDI) developed by A T Kearney, for the third year, India has emerged as the nation which has topped the index. India is currently the twelfth largest consumer market in the world. According to a study by McKinsey Global Institute, India is likely to join the premier league of the world’s consumer markets by 2025, improving its position to the fifth. The recent growth spurt was achieved primarily through a surge in productivity and is sustainable. As per this report, India’s contribution to world growth will be high and increasing.

Indian retail expects to see quality work of global standard and quality through 2010. Unplanned retail initiatives combined with the unorganized market has resulted in a sorry state of affairs. The close of 2010 should see a clear vision of retail infrastructure development keeping in mind infrastructure population growth a greater issues relating to the Indian consumer at large. Given all these factors the end of the year 2010 should definitely mark a new beginning and should end on a positive note.