Retail Industry in India
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The Indian retail market is growing at a very fast pace of about 20% and has a market size of US$ 500 billion. The retail sector is the second largest employer after agriculture. The retail industry alone managed to generate more than 35 million job opportunities.
The Indian retail industry is segregated into two sectors: organized and unorganized retailing. Organized retailing comprises the kind of trading activities that are undertaken by retailers who are registered for sales tax, Income tax etc. Corporate backed hypermarkets, retail chains, privately owned large retail businesses are some of the examples of organized retailing. Unorganized retailing mainly comprises local Kirana shops, owner-managed general stores, street vendors, convenience stores etc.
However, now it can be seen that traditional markets are paving the way for the development of departmental stores, supermarkets, and speciality stores. Shopping from malls and buying branded products is also gaining momentum. Despite all this, the Indian retail sector is mainly dominated by the Unorganized segment with 95% -97& share. The reason for this being the deep penetration of this sector in the rural areas and a large number of mom and pop stores in the urban areas.
Some of the key players in the organized retail sector
Many Foreign players have entered India through Joint Venture with domestic firms like :
As Online shopping has gained popularity amongst a large number of people especially youngsters, online retailers are flourishing as an important sales medium for various consumer brands. Everything ranging from apparel to accessories for all age groups is available online these days. Brands like PUMA, NIKE etc have recorded huge increments in their online sales in 2012.
Nike, a footwear brand, has its associations only with online retailers such as Myntra and Jabong. And it has recently launched its new variety of cricket gear on Jabong. These online retailers help such brands widen their visibility and make them easily accessible to buyers.
Foreign Direct Investment in retail
Under the government approval route, 100% FDI has been permitted, in single-brand product retailing as per DIPP guidelines. For projects involving FDI beyond 51% it is mandatory to source at least 30% material from indigenous small and cottage industries, having a maximum investment of about 5 crores in plant and machinery.
In multi-brand retail, the Central government has permitted 51% FDI. However, the final decision rests with the state government. States that are led by Congress parties like Delhi, Assam, Haryana, Rajasthan foreign supermarkets will be allowed to set up their ventures. However states led by BJP like Gujarat, West Bengal Kerala etc. will not permit 51% FDI in multi-brand retail.
The Indian retail industry is segregated into two sectors: organized and unorganized retailing. Organized retailing comprises the kind of trading activities that are undertaken by retailers who are registered for sales tax, Income tax etc. Corporate backed hypermarkets, retail chains, privately owned large retail businesses are some of the examples of organized retailing. Unorganized retailing mainly comprises local Kirana shops, owner-managed general stores, street vendors, convenience stores etc.
However, now it can be seen that traditional markets are paving the way for the development of departmental stores, supermarkets, and speciality stores. Shopping from malls and buying branded products is also gaining momentum. Despite all this, the Indian retail sector is mainly dominated by the Unorganized segment with 95% -97& share. The reason for this being the deep penetration of this sector in the rural areas and a large number of mom and pop stores in the urban areas.
Some of the key players in the organized retail sector
- Pantaloons Retail Ltd, a future group venture
- Shoppers Stop Ltd
- Spencer Retail, RPG enterprises
- Lifestyle, Landmark Group Venture
Many Foreign players have entered India through Joint Venture with domestic firms like :
- Carrefour in New Delhi, which launched its first cash and carry store here.
- Walmart, a joint venture with Bharti Retail, owns Easy Day
- British retailer TESCO Plc entered into a JV with Trent, retail segment of TATA group.
- Marks & Spencer joint venture with Reliance Retail
- Flourishing organized retail sector: The construction of mega malls and hypermarkets is boosting organized retailing.
- The spending capacity of youth is showing an upward trend. India has a large youth population
- Easy availability of customer credit, increase in the use of credit cards, access to cheap and quick loans.
- Changing mindset of consumers. The mindset of buyers is shifting from low price and higher quantity to better quality and high satisfaction.
- High brand consciousness amongst buyers.
- Food and Grocery retail: The food market in India is largely unorganized. The expenditure on food products by Indian households is the highest in the world. With rapid urbanization and consumerism, there exists huge untapped potential which needs to be explored
- Apparel: Demand for stitched garments and western outfits is increasing at the rate of 40% to 45%. Factors critical to the success of this segment are easy availability and affordability of fashionable garments along with value-added benefits.
- Beauty and Wellness: Pharmacy retailing in India is largely occupied by a local pharmacist. However new chemist stores like 98.3 are emerging which offer drugs, health and beauty care products.
- Consumer durable: The market for consumer durable is the US $6.5 billion and is expected to grow at the rate of 18%.
- Furniture and furnishings: There has been a new trend evident in the market wherein the modern retailers are setting up home furnishings sections in hypermarkets and speciality stores. This segment faces tough competition from local retailers.
As Online shopping has gained popularity amongst a large number of people especially youngsters, online retailers are flourishing as an important sales medium for various consumer brands. Everything ranging from apparel to accessories for all age groups is available online these days. Brands like PUMA, NIKE etc have recorded huge increments in their online sales in 2012.
Nike, a footwear brand, has its associations only with online retailers such as Myntra and Jabong. And it has recently launched its new variety of cricket gear on Jabong. These online retailers help such brands widen their visibility and make them easily accessible to buyers.
Foreign Direct Investment in retail
Under the government approval route, 100% FDI has been permitted, in single-brand product retailing as per DIPP guidelines. For projects involving FDI beyond 51% it is mandatory to source at least 30% material from indigenous small and cottage industries, having a maximum investment of about 5 crores in plant and machinery.
In multi-brand retail, the Central government has permitted 51% FDI. However, the final decision rests with the state government. States that are led by Congress parties like Delhi, Assam, Haryana, Rajasthan foreign supermarkets will be allowed to set up their ventures. However states led by BJP like Gujarat, West Bengal Kerala etc. will not permit 51% FDI in multi-brand retail.
Retail market size across India from 2014 to 2021:
| Financial Year | Value (In billion USD) |
|---|---|
| 2014 | 534 |
| 2016 | 641 |
| 2017 | 795 |
| 2018 | 850 |
| 2020 | 883 |
| 2021 | 1200 |
Category breakdown of organized retail in India:
| Categories | Percentage |
|---|---|
| Apparel and accessories | 28.00% |
| Food and groceries | 19.00% |
| Consumer durables | 15.00% |
| Personal products | 15.00% |
| Food services and entertainment | 9.00% |
| Others | 14.00% |
Consumer complaints in India:
| Year | Complaints in National Helpline | Complaints in State Helpline |
|---|---|---|
| 2013-14 | 100600 | 33728 |
| 2014-15 | 140408 | 43990 |
| 2015-16 | 172558 | 54827 |
India’s Top retailers:
| Retail Group | Outlet name |
|---|---|
| Future Group | Pantaloons |
| Brand factory | |
| E-zone | |
| Fashion Station | |
| REI Agro Ltd. | 6Ten |
| FabIndia | Textile, Apparel, home furniture and jewellery |
| RPG Group | CEAT Tyres |
| Zensar technologies | |
| KEC International Ltd. | |
| TATA Group | Westside |
| Tanishq | |
| Titan | |
| Skinn | |
| Reliance Retail | Reliance trends |
| Reliance mart | |
| Reliance footprint | |
| Reliance jewellery | |
| K Raheja Corp. group | Shoppers Stop |
| Crossword | |
| Aditya Birla Group | Louis Phillip |
| Gitanjali | Jewellery stores |
| Watches | |
| Apparel | |
| Chain stores |
Other Facts of Indian Retail Industry
- India’s E-commerce industry will increase by 111 billion US dollars, by the year 2024
- India holds the fifth position for the largest retail destination in the global count
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