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Overview of Retail Industry in India

by Rahul Kumar 3 months ago in industry
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Retail Industry in India

The Indian Retail Industry is one of the largest and fastest growing among all the other industries in the world. It has emerged as one of the most dynamic and fast-paced industries because of the entry of many new private players and their increasing participation accounting more than 10% of the country’s Gross Domestic Product (GDP) & 8% of the employment. So, it is said that India is the world’s fifth largest retail destination globally as this field showing gradually inching its way towards becoming the next boom industry.

India’s price competitiveness attracts large retail players to use it as a sourcing base. But all players have not yet succeeded because of the heavy initial investments that are required to compete among other competitor companies to remain ahead in the long run. Retail Industry is not only an essential part of our economic structure but also mould our lifestyle. The modern retail account to only 10% accounts of the market value of $600 Billion but is expected to increase to 15%-18% by 2020 driven by income growth, urbanization and attitudinal shifts.

In the last 15 years, the sector has witnessed a CAGR of 7.46% and is expected to show more than 16.5% compounded annual growth in the next 5 years by 2020.

Retail Classification:

The Indian Retail industry can be broadly classified into two categories namely- Organized and Unorganized retail. Organized retail - Organized traders/retailers, who are licensed for trading activities and registered to pay taxes to the government. Unorganized retail – It consists of unauthorized small shops - conventional Kirana shops, general stores, corner shops among various other small retail outlets - but remain as the radiating force of Indian retail industry.

The Indian Retail sector has come off age and has gone through a major transformation over the last decade with a noticeable shift towards an organized retailing. As of now, the organized retail sector has contributed to 8% of the total trade and is expected to reach to 24% in the next five years. Healthy economic growth, changing demographic profile, increase in disposable incomes, urbanization, growing & changing consumer tastes and preferences are some of the key factors for driving growth in the organized retail sector market in India.

Apart from this, India has been ranked 3rd in the world after China and Brazil in terms of Net Retail Sales as it has been noticed that Food and Grocery account for close to 70% of the total sales in India and Jewellery account close to 6% which is expected to increase to 8% by 2020.

Key Growth Drivers of Retail Industry in India

• Nuclearization of Families

• An Increase in households incomes

• Large working population

• Reasonable Real estate prices

• Increase in disposable income and customer aspiration

• Demand as well as increase in expenditure for luxury items

• Growing preference for branded products and higher aspirations

• Growing liberalization of the FDI policy in the past decade

• Increasing urbanization

The overall retail market of India has the potential to grow from $630 billion to $1,100-1,200 billion by 2020 as the Indian Retail sector will reap the benefits of a large and young population adding to the workforce, 70 per cent increase in income levels, Rapid urbanization and growing trend towards nuclear families, new technology and lifestyle trends creating replacement demand, etc.

Although the opportunity is massive, Indian retailers would need to transform themselves to win as with the GST coming in; productivity will go up along with manufacturing and retailing. With that we can participate in the consumption and growth story in India too.

The Road Ahead:

• E-commerce is expanding steadily in the country due to which it is probably creating the biggest revolution in the Indian retail industry and this trend would continue in the years to come.

• Organized retail is a new phenomenon in India and the market is growing very rapidly. The middle class growing very rapidly that is an important factor which is contributing in the growth of Indian retail sector. According to the report up to 2030, it is estimated that 21 million household will be converted into 91 million households who are in ‘middle class’. But for this both organized and unorganized retail companies have to work together to ensure better prospects for the overall retail industry in India while generating new benefits for their customers.

So, the Retail sector is expected to contribute more in upcoming years in terms of employment opportunities and national development despite of facing challenges in retailing in India become as opportunities due to demographic segment can considered for growth of the sector.

Nevertheless, the long-term outlook for the industry is positive, supported by rising incomes, favorable demographics, entry of foreign players and increasing urbanization. Thus, with tremendous potential and huge population, India is set for high growth in Indian Retail Sector.

Pramod Chandraker worked in Business development at OS Digital a digital marketing company, a web designing company in Delhi, specialized in messaging, voice, digital marketing and web designing, bulk sms service provider company, missed call service provider, voice call service provider, OTP sms service, voice OTP service, SEO service, PPC and other paid advertising service in India as well as International.


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Rahul Kumar

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