Consumer Retail Industry In India

Before 2011, India had prevented innovation and organised competition in its consumer retail industry. One report estimates the 2011 Indian retail market as generating sales of about $470 billion a year, of which a minuscule $27 billion comes from organised retail such as supermarkets, chain stores with centralised operations and shops in malls.

Others believe the growth of Indian retail industry will take time, with organised retail possibly needing a decade to grow to a 25% share. A 25% market share, given the expected growth of Indian retail industry through 2021, is estimated to be over USD 1.4 trillion a year (see Figure 14): revenue equal to the 2009 revenue share from Japan for the world's 250 largest retailers.

Figure 14: Indian

Though the share of organized retailing has been low in India as compared to other countries i.e. 8% in 2015 (see Figure 15). In India, the organized retail in the year 2012 was to the tune of USD 490 billion and it is estimated to reach USD 948 billion by the year 2018-2019, with the Compound Annual Growth Rate (CAGR) of 12-13%.

Figure 15: Organized Retail share Source: (IBEF, 2016)

Organized retailing in India is now no more restricted to the metros and major cities. There has been successful development of value based concepts in the smaller towns as well. This development of retail space in smaller cities and towns is now driving the organized retail into the next levels of cities. In 2015 alone 45% of organized retail can be found in Tier 2 Cities alone (Technopak, 2015).

Figure 16: Organized Retail penetration Source: (Technopak, 2015)

The structure of retailing is also developing rapidly. Shopping malls are becoming increasingly common in large cities, but other kinds of organized retail have also registered a lot of growth over the years including the period 2010-2011 (Technopak,

Deloitte estimates India's organised retail had a 33% share in clothing and apparel, while the food only has 11% (Technopak, 2015).

The following can be regarded as potential areas of growth:

Rural markets constitute approximately 70 per cent of the total population base, but currently account for only 40 per cent of the total consumption in India, due to minimal penetration of organised retailing. Several national and international retail and FMCG players have been planning to explore these untapped markets and are localising their products for this market with regard to price points, packaging, stock- keeping units (SKU) size, promotions, etc.

Working population in the working age group of 15 to 54 years is the largest spender on retail. As per the census of 2011, more than 50 per cent of India’s total population falls under this group, indicating the significant influence wielded by this segment on consumer spending.

Young Indians are driving purchases in categories such as mobile phones, fashion, accessories, food and beverages, quick service restaurants, etc., and are willing to experiment and change habits. As per the census of 2011, India also has about 500 million Indians under the age of 25. Young Indians have access to more money than before, driving independence, aspirations and demand for