“Club of Knowledge Hunters”

Organised retail to exceed Rs 2.3 trillion in 2010

Posted by superstar23 on September 19, 2008

The Indian retail market will be in excess of Rs 18,10,000 crore by year 2010, of which organised retail will be over Rs 2,30,000 crore – around 13 per cent of the total market in 2010.

According to the Images F&R Research estimates for the India Retail Report, the Indian retail market stood at Rs. 1,330,000 crore in 2007 with an annual growth of 10.8 per cent.

Of this, organised retail was an estimated 5.9 per cent, amounting to Rs 78,300 crore. However, this organised or modern retail segment grew at 42.4 per cent and is expected to grow faster over the next three years, given that major global players and Indian corporate houses are seen entering the market.

In the overall retail pie, food and grocery was the dominant category with 59.5 per cent share, valued at Rs 792,000 crore, followed by clothing and accessories with a 9.9 per cent share at Rs 131,300 crore.

Interestingly, out-of-home food (catering) services (Rs 71,300 crore) has overtaken jewellery (Rs 69,400 crore) to become the third largest retail category, with a 5.4 per cent market share – which reflects the massive employment opportunities in the services sector and accompanying changes in consumer lifestyles.

Consumer durables (Rs 57,500 crore) is the fifth largest retail category followed by health & pharmaceuticals (Rs 48,800 crore), entertainment (Rs 45,600 crore), furniture, furnishings & kitchenware (Rs 45,500 crore), mobiles & accessories (Rs 27,200 crore), leisure retail (Rs 16,400 crore), footwear (Rs 16,000 crore), health & beauty care services (Rs 4,600 crore) and watches & eyewear (Rs 4,400 crore).

In the organised retail segment, the picture is different. Clothing & fashion accessories is the largest category with 38.1 per cent of the market share, valued at Rs. 29,800 crore, followed by food & grocery accounting for 11.5 per cent of the organised retail market at Rs. 9,000 crore.

Footwear with 9.9 per cent of the organised retail market share at Rs. 7,750 crore, consumer durables with 9.1 per cent market share at the fourth place (Rs.7,100 crore), and out-of-home food (catering) services and furniture, furnishings & kitchenware retail in the order.

The fastest growth was recorded in the health & beauty care services category (Rs. 660 crore), which grew at the rate of 65 per cent in 2007 over the previous year –a reflection of rise in the services sector.

The growth of modern retail will also have a cascading effect on its allied businesses. For one, the number of operational shopping centres in various formats is expected to rise to 500 by end-2010, up from the present 280.

Shopping centre business alone is estimated to become a Rs 40,000 crore business by 2010-11.

Secondly, it will have an impact on the supply chain, logistics and infrastructure, given that organised retail is a function of strong supply chain and robust physical infrastructure.

So major retailers will have to continuously upgrade their back-end, front-end and supply chain dynamics in order to provide a standard of value and services to their customers.

Companies like Reliance, AV Birla, Tata, Godrej, Bharti, Mahindra, ITC, RPG, Pantaloon, Raheja and Wadia Group are expected to invest close to Rs. 100,000 crore in the retail business over the next five years.

India has been topping A T Kearney’s list of emerging markets for retail investments for the last three years and stood 2nd only behind Vietnam this year.

A report by Goldman Sachs credits India with the potential to deliver the fastest growth over the next 50 years with an average rate of more than five per cent a year for the entire period.

Total FDI inflow in 2007-08, was to the tune of $25 billion (Rs 116,000 crore) – up 56 per cent over the previous year.

However, to sustain an ambitious GDP growth target of 9 per cent per annum, the country needs to invest around $500 billion (Rs 2,300 crore) in development of infrastructure over the next five years. Of this, about $150 (Rs 695 crore) billion is expected to be FDI.

source:-business today


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