RETAIL SECTOR SCENARIO IN INDIA

Retailing is one of the dynamic sectors of the last decade. It’s only in the recent past it witnessed a huge amount of change. With increased purchasing power parity especially post liberalization retailing in India has arrived

Indian retailing today is at an interesting crossroads. The retail sales are touching picks and new technologies are improving retail productivity. But with new opportunities Retailers in India are also facing new challenges.

As the Corporates – the Piramals, the Tatas, the Rahejas, ITC, S.Kumar’s, RPG Enterprises and Mega retailers- Crosswords, Shopper’s Stop, and Pantaloons race to revolutionize the retailing sector, retail as an industry in India is coming alive. Retail sales in India amounted to about Rs.7400 billion in 2002, expanded at an average annual rate of 7% during 1999-2002. With the booming economic retail sales are also expected to grow @nearly 10%.The growth in real retail sales during 2003- 2008 is 8.3% per year, compared with 7.1% for consumer expenditure. Sales from large-format stores like hyper markets super markets & malls are to grow at rates ranging from 24% to 49% per year during 2003-2008, according to a latest report by Euromonitor International, a leading provider of global consumer-market intelligence. A. T. Kearney Inc. places India 6th on a global retail development index. India is having the highest per capita outlets in the world - 5.5 outlets per 1000 population. Around 7% of the population in India is engaged in retailing, while USA has 20%.

In a developing country like India, a huge portion of consumer expenditure is on basic necessities, like food. F&B and tobacco accounted for as much as 71% of retail sales in 2002.  But the pie is falling down from 73% in 1999. Nothing unnatural, because with income growth, Indians, like consumers elsewhere, have started spending more on non-food items compared with food products. Sales through supermarkets and department stores are small compared with overall retail sales. But their sales are rapidly increasing almost at 30% and are expected to continue during the next few years, with the mushrooming of such outlets due to consumer demand and business potential.

Reasons for growth of Retail in India:

The factors responsible for the development of the retail sector in India can be broadly summarized as follows:

• Increase in income & infrastructure with changing consumer tastes. By income classification, the National Council of Applied Economic Research (NCAER) classified approximately 50% of the Indian population as low income in 1994-95 which is expected to decline to 17.8% by 2006-07.

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• Liberalization of the Indian economy which has opened up markets for brands like Kellogs, Unilever, Nestle, etc. These companies are offering a wide range of choices to the Indian consumers.

• Consumers are demanding foreign brands like Apple, Sony, Panasonic, etc.

• The internet revolution. Reach of satellite T.V. channels is helping in creating awareness about global products for local markets. About 47% of India’s population is under the age of 20; and this will increase to 55% by 2015. This young population, which is tech-savvy, watches more than 60 TV channels, and displays the highest propensity to spend. ...

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