Ten facts on Indian retailing

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Ten facts on Indian retailing

Post  somdatta on Tue Aug 26, 2008 1:21 am

India has attracted increasing attention from multinational retailers in recent years. Alongside China, India is viewed as one of the top economic powerhouses of Asia, generating 19.8% of the Asia-Pacific region's food retail value. While India's organised retail market is still in its infancy it offers huge potential for expansion. Here are ten quick facts on Indian retail.

1. In 2007 India's food retail sector generated revenues of US$202.6bn. By 2013, just-food estimates that the Indian grocery retail market will reach a value of US$507.3bn.

2. The food retail industry in India has seen fluctuations in its growth rate over the past four years, with the growth rate reaching its peak of 10.1% in 2007. This trend is set to continue, with the growth rate expected to remain just below 6% until 2012.

3. Indian retailing is dominated by small independent retailers and kirana stores, which account for about 65.1% of sales. Food specialists command 28.80% of sales while modern retailers - discounters, supermarkets and hypermarkets - accounting for 4.1%, 1.4% and 0.7% respectively.

4. Sales through food retailers proved the most lucrative distribution method for the Indian food retail industry in 2007, generating total revenues of $131.8bn - 65.8% of the industry's overall value.

5. Current legislation has blocked the entry of foreign multi-brand retailers - such as Wal-Mart, Carrefour and Tesco - into the consumer retail market. Multi-brand retailers are only allowed to operate wholesale businesses or work with an Indian partner through franchise and licensing agreements. Foreign single-brand retailers, such as the UK's Marks and Spencer, are allowed to operate in the market.

6. The largest modern retailers in the Indian market include: Trinethra Super Retail Ltd, Food Bazaar, Margin Free Market, Reliance Retail and Subhiksha Trading Services. The market leader is Pantaloon Retail.

7. The pace of expansion in the modern retail sector is increasing. In 2007 chain retailers added more than 10,000 new outlets.

8. Indian retailers are currently focusing their attention on smaller formats located in urban areas, with 380 convenience stores opened in 2007, compared to 58 hypermarkets and 30 discount outlets. However, Bharti Enterprises, partnered with Wal-Mart, and Tata Group, partnered with Tesco, have both signalled their intention to drive expansion through hypermarket openings in the coming years.

9. The cost of brand building and difficulty of obtaining retail space in high footfall areas has resulted in consolidation of the market, with regional brands being targeted by the larger corporate conglomerates.

10. Much of the focus of modern retailers has remained on urban areas. However, rural retailing is on the rise in India. Since 2003, Godrej Agrovet Ltd and ITC Ltd have opened town and rural outlets. These retailers are stepping up the pace of growth in rural areas, with ITC planning 100 stores by March 2010 and Godrej Aadhar planning 1,000 stores by 2010. Reliance is currently contemplating tapping into demand in towns by setting up 700 Reliance Town Centres to cater to towns with a population of less than 300,000.

somdatta

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