Indian Retail Market

The Indian retail market is the fifth largest retail destination all across the globe. It has been
ranked as the most attractive emerging market for investment in the retail sector in 2009. In the
entire Gross Domestic Product of India, the share of retail trade was between 8–10% in 2007, where
presently it has touched around 12%, and in all probability will touch 22% by the end of 2010.

Consumerism is on the rise with the rising trend of middle class segment in the country. The
Indian consumer (retail) market, in all probability, will grow four times by 2025. The value of India's
retail market has touched US$ 511 billion in 2008. India has escalated up to the 39th most preferred
retail destination globally in 2009 (in 2008, they ranked 44th).

Components of the Indian retail Market

Banks, capital goods, engineering, fast moving consumer goods (FMCG), software services,
oil marketing, power, two-wheelers and telecom companies – they are the main driving force in the
retail growth of India. Global retailers still now find India to be among the most attractive
destination. On July 2009, the foreign direct investment (FDI) inflows, in single-brand retail trading,
touched approximately US$ 46.60 million.

Retail formats in India

• Hypermarts/supermarkets: large self-servicing outlets offering products from a variety of

categories.
• Mom-and-pop stores: they are family owned business catering to small sections; they are
individually handled retail outlets and have a personal touch.
• Departmental stores: are general retail merchandisers offering quality products and
services.
• Convenience stores: are located in residential areas with slightly higher prices goods due to
the convenience offered.
• Shopping malls: the biggest form of retail in India, malls offers customers a mix of all types
of products and services including entertainment and food under a single roof.
 • E-trailers: are retailers providing online buying and selling of products and services.
• Discount stores: these are factory outlets that give discount on the MRP.
• Vending: it is a relatively new entry, in the retail sector. Here beverages, snacks and other
small items can be bought via vending machine.
• Category killers: small specialty stores that offer a variety of categories. They are known as
category killers as they focus on specific categories, such as electronics and sporting goods.
This is also known as Multi Brand Outlets or MBO's.
• Specialty stores: are retail chains dealing in specific categories and provide deep assortment.
Mumbai's Crossword Book Store and RPG's Music World are a couple of examples.

Size of Indian retail market

India’s retail sector is estimated to touch US$ 833 billion by 2013 and US$ 1.3 trillion by
2018, with a compound annual growth rate (CAGR) of 10% - which is quite lucrative. Al these
estimations are due to the fact that the consumer spending has seen a rise of around 75%, in the past
four years. The organized Indian retail market is slated to grow at a CAGR of 40%, touching US$
107 billion by 2013.

5% of the Indian retail market is occupied by the organized retail sector, which is all slated to
witness the majority number of large format malls and branded retail stores. The increase in the
number of such malls would be first seen in South India, followed by North, West and the East over
the coming two years. Another latest research shows that more than 100 malls spanning a space of
over 30 million sq feet is estimated to open in India between 2009 and 2010 end. Investment in the
organized retail market would be around US$ 503.2 million in 2009. This could go further up to US$
1.26 billion in the next four to five years, at a CAGR of 40%.

India has emerged as the third most attractive market destination for apparel retailers over the
years. In India, apparel is the second largest retail category and will have a 12-15% growth rate
every year. Apparel, food and grocery is expected to lead the organized retail sector in India.
 The Indian retail market has been witnessing exponential growth with developments taking
place not only in major cities and metros but tier-II and tier-III cities in India are also on the focus.

Growth of Indian Retail Market

According to the 8th Annual Global Retail Development Index (GRDI), revealed by consulting firm
AT Kearney, Indian retail market is most attractive. India had claimed the top position amongst 30
countries. Vietnam had toppled India for the top spot in 2008. The onset of economic slowdown
changed the numbers. AT Kearney now feels that developing countries like India may lead the
recovery of economy.

Affordable housing and low inflation in some of the Indian cities pushed the score to 68.
India is ahead of Russia (60), China (56), UAE (56), and Saudi Arabia (56). Slower retail sales in
India are forcing the Indian retailers to defer plans of expansion and reorganise their operations. But,
global retailers like Wal-Mart are continuing on their expansion plans as Indian consumers are
growing familiar with the formats of global retail.

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%. It is also expected to reach 22% by 2010.According to a
report by Northbride Capita, the India retail industry is expected to grow to US$ 700 billion by 2010.
By the same time, the organized sector will be 20% of the total market share. It can be mentioned
here that, the share of organized sector in 2007 was 7.5% of the total retail market.
Developments in the Indian retail market

• Marks & Spencer Reliance India has plans to open 35 stores over the next five years. The
51:49 joint ventures between UK’s Marks and Spencer and Reliance Retail Ltd. already have
15 stores spanning India.
• Carrefour SA, the largest retailer of Europe, is expected to start wholesale operations in India
by 2010 and also has shared its plan for setting up the first cash-and-carry outlet in the
National Capital Region. The present status looks alluring with Carrefour exporting goods
valued US$ 170 million from India to Europe, UAE, Indonesia, Europe, Thailand, Singapore
and Malaysia.
• Jewellery manufacturer and retailer, Gitanjali Group and MMTC will set up a chain of
exclusive retail outlets jointly known as Shuddi–Sampurna Vishwas. This joint venture will
see 60 stores across India by end of 2009. They will retail hallmarked gold and diamond
Jewellery.
• Mahindra Retail, a part of the Mahindra Group, is hopeful about its investment plans to the
tune of US$ 19.8 million. This investment will help them come out with a specialty retail
concept by 2010 known as 'Mom and Me'.
• Pantaloon Retail India (PRIL) has investment plans of more than US$ 103.3 million for
expanding its seamless mall Central and the value fashion format Brand Factory in the next
two years.
• Bharti Retail has launched eight Wal-Mart private labels—including two large labels ‘Great
Value’ and ‘George’— in its supermarket chain Easyday. It is all set to attract more
consumers because of their international design and packaging.
• Italian sportswear brand Lotto is all set to launch two new footwear brands Sabots and
Calcetto in India very soon. By March 2010, they will have at least 50 exclusive outlets.
• Steel players such as JSW Steel and Essar Steel are focusing on opening up more retail
outlets across the Indian market. JSW Steel presently has 50 steel retail outlets known as
JSW Shoppe and the target is to increase the number to around 200 by March 2010.
Similarly, Essar Steel has retail outlets known as Essar hypermarts. With around 150 such
outlets, this segment is responsible for about 20-25% to the Essar’s total revenue.
• Expansion mode for the large retailers - Aditya Birla Retail, Reliance Retail and Shoppers
Stop, and food chains like McDonald’s as the rentals are dropping sharply.
• Few of the major international brands are aiming to establish a strong foothold in India. Few
of such brands are The Pizza Company and Spicchio Pizza (from Thailand), Coffee Club
from Australia, Japanese brand Lolita Fashion, Revive Juice Bars from the UK, Mrs Fields
Cookies and Jamba Juice from the US, and French fashion brand Jules.
• Retail brands like United Colors of Benetton, Tommy Hilfiger and Puma have been opening
up factory outlets for selling excess stock. This step is always an interesting method for
wooing the price-conscious buyers.
Indian Retailers

Indian apparel retailers are increasing their brand presence overseas, particularly in
developed markets. While most have identified a gap in countries in West Asia and Africa, some
majors are also looking at the US and Europe. Arvind Brands, Madura Garments, Spykar Lifestyle
and Royal Classic Polo are busy chalking out foreign expansion plans through the distribution route
and standalone stores as well. Another denim wear brand, Spykar, which is now moving towards
becoming a casual wear lifestyle brand, has launched its store in Melbourne recently. It plans to open
three stores in London by 2008-end.

The low-intensity entry of the diversified Mahindra Group into retail is unique because it plans
to focus on lifestyle products. The Mahindra Group is the fourth large Indian business group to enter
the business of retail after Reliance Industries Ltd, the Aditya Birla Group, and Bharti Enterprises
Ltd. The other three groups are focusing either on perishables and groceries, or a range of products,
or both.

• Vivek Limited Retail Formats: Viveks, Jainsons, Viveks Service Centre, Viveks Safe
Deposit Lockers
• PGC Retail -T-Mart India: Switcher , Respect India , Grand India Bazaar ,etc.,
• REI AGRO LTD Retail-Formats:6TEN Hyper & 6TEN Super
• RPG Retail-Formats: Music World, Books & Beyond, Spencer’s Hyper, Spencer’s Super,
Daily & Fresh
• Pantaloon Retail-Formats: Big Bazaar, Food Bazaar, Pantaloons, Central, Fashion Station,
Brand Factory, Depot, aLL, E-Zone etc.
• The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark, Titan
Industries with World of Titans showrooms, Tanishq outlets, Chroma.
• K Raheja Corp Group-Formats: Shoppers Stop, Crossword, Hyper City, Inorbit
• Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International Franchise
brand stores.
• Pyramid Retail-Formats: Pyramid Megastore, TruMart
• Nilgiri’s-Formats: Nilgiris’ supermarket chain
• Subhiksha-Formats: Subhiksha supermarket pharmacy and telecom discount chain.
 • Trinethra- Formats: Fabmall supermarket chain and Fabcity hypermarket chain
• Vishal Retail Group-Formats: Vishal Mega Mart
• BPCL-Formats: In & Out
• Reliance Retail-Formats: Reliance Fresh
• Reliance ADAG Retail-Format: Reliance World
• German Metro Cash & Carry
• Shoprite Holdings-Formats: Shoprite Hyper
• Paritala stores bazar: honey shine stores
• Aditya Birla Group - more Outlets
• Kapas- Cotton garment outlets

Major Retailers in India

Pantaloon:

Pantaloon is one of the biggest retailers in India with more than 450 stores across the country.
Headquartered in Mumbai, it has more than 5 million sq. ft retail space located across the country.
It's growing at an enviable pace and is expected to reach 30 million sq. ft by the year 2010. In 2001,
Pantaloon launched country's first hypermarket ‘Big Bazaar’. It has the following retail segments:

• Food & Grocery: Big Bazaar, Food Bazaar

• Home Solutions: Hometown, Furniture Bazaar, Collection-i
• Consumer Electronics: e-zone
• Shoes: Shoe Factory
• Books, Music & Gifts: Depot
• Health & Beauty Care: Star, Sitara
• E-tailing: Futurebazaar.com
• Entertainment: Bowling Co.

Tata Group

Tata group is another major player in Indian retail industry with its subsidiary Trent, which
operates Westside and Star India Bazaar. Established in 1998, it also acquired the largest book and
music retailer in India ‘Landmark’ in 2005. Trent owns over 4 lakh sq. ft retail space across the
country.
RPG Group

RPG Group is one of the earlier entrants in the Indian retail market, when it came into food &
grocery retailing in 1996 with its retail Foodworld stores. Later it also opened the pharmacy and
beauty care outlets ‘Health & Glow’.

Reliance

Reliance is one of the biggest players in Indian retail industry. More than 300 Reliance Fresh
stores and Reliance Mart are quite popular in the Indian retail market. It's expecting its sales to reach
Rs. 90,000 crores by 2010.

AV Birla Group

AV Birla Group has a strong presence in Indian apparel retailing. The brands like Louis Phillipe,
Allen Solly, Van Heusen, Peter England are quite popular. It's also investing in other segments of
retail. It will invest Rs. 8000-9000 crores by 2010.

Challenges facing Indian retail industry

• The tax structure in India favors small retail business

• Lack of adequate infrastructure facilities
• High cost of real estate
• Dissimilarity in consumer groups
• Restrictions in Foreign Direct Investment
• Shortage of retail study options
• Shortage of trained manpower
• Low retail management skill
The Future

The retail industry in India is currently growing at a great pace and is expected to go up to
US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at
a CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone
up and is also expected to go up further in the future. In the last four year, the consumer spending in
India climbed up to 75%. As a result, the India retail industry is expected to grow further in the
future days. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%.