Quick snapshot of Retailing in India

Estimated Market Size:

Overall retail market : USD 270 billion

Apparel Market:

• Women’s wear: USD 10.7 billion
• Men’s Wear: USD 12.2 billion
• Kid’s Wear: USD 7.8 billion

-TTotal: USD 31 billion

Key Insights:

• Food & Grocery sector is the major contributor
• Retailing booming in tier 2 cities in India due to the growth of IT & BPO industries in these areas
• Consumer spending in India has grown by 10% per annum for the last 2 years
• India has the largest youngsters population (890 million Indians below 45 years of age)
• Retailing industry in India estimated at USD 270 billion in 2006 and might touch USD 440 billion in 2010
• Organized retailing in 2006 was USD 12.4 billion (just 4.7% of the retailing market)
• Food and grocery is the largest chunk worth USD 160 billion, 99% of which is catered by mom n pop stores
• Clothing, textiles and fashion accessories form the second largest chunk. Organized retail in this sector is set to touch 40% . 2008-2010 the segment is expected to grow 45% YoY.
• Total retail to grow 6% YoY for next 4 years
• Supermarkets and Hypermarkets are the preferred formats

Road Blocks:

• Limitation in the Foreign Direct Investment
• 51% FDI permitted in Single Brand Retail
• 100% permitted in wholesale trade
• Very high real estate prices. This is driving the retailers to set up smaller outlets rather than huge hypermarkets

Industry Demands:

• Demand for retailing as an “industry”. Increase in FDI for single branded retail to 100% and gradual increase in FDI for multi-branded retail
• Demand for FDI in real estate, as many retailers would like to own their space
• Demand for liberalization in the labor laws and to let the retail outlets remain open 24x7

India as a sourcing destination:

• India has been a preferred sourcing destination for international retailers especially the fashion retailers
• Many international brands like GAP, Banana Republic, Tommy Hilfiger, Timberland, Marks & Spencer, Ralph Lauren, Levis, Marc Jacobs, etc. source from India
• The margins for the Indian exporters has been squeezed recently because of the weakening dollar
• And the demand has also come down over the last 6 months because of the likely US recession
• This has resulted in many exporters laying off employees
• The exporters demand sops from the Government in the form of changes in the repayment of their loans, reduction in the import duty of machinery, reduction in base excise duty, etc.
• Some of the exporters have also signed tie-ups with foreign companies and have set up retail outlets

Key Players:

-R Reliance Retail, Pantaloon, Lifestyle, K Raheja Corp, Subhiksha, Pyramid Retail, Trent, Vishal Group, Bharti Group (in partnership with Wal-Mart), Aditya Birla group, Provogue (Apparel retailer), Koutons (Apparel retailer), etc.