Retail in India: Brief Overview
Indian retail business values at around US$ 550 billion as of now and about four per cent of it accounts for the organised sector. A report by Boston Consulting Group (BCG) has revealed that the country's organised retail is estimated at US$ 28 billion with around 7 per cent penetration. It is projected to become a US$ 260 billion business over the next decade with around 21 per cent penetration.
Another report by Business Monitor International (BMI) suggests that enhancing middle and upper class consumer base has set vast opportunities in India's tier-II & tier-III cities. The greater availability of personal credit, improved mobility, better tourism et al, are all small, but significant contributors to the growth of Indian retail industry. Also, more and more companies are willing to invest in India due to significant growth forecasts on gross domestic product (GDP) (BMI predicts average annual GDP growth of 7.6 per cent through 2015).
Luxury Retail Soars High
Without wasting any time to react on the Indian Government's decision of allowing 100 per cent foreign direct investment (FDI) in single-brand retail, luxury brand retailers have announced their expansion plans in Indian markets. Brands like Vertu, Christian Loubotin, Armani Junior, among others, will open their exclusive stores at DLF Emporio in early 2012, while brands like Van Laack and Diesel Black Gold will commence their operations by January 2012 itself.
A report by CII-AT Kearney revealed that Luxury brands market in India grew at a healthy 20 per cent during 2010 reaching a size of US$ 5.8 billion. It further stated that the Indian luxury market stood at a value of US$ 4.76 billion in 2009 and is anticipated to be worth US$ 14.7 billion by 2015.
Where on one hand the luxury electronics and car segments registered a growth of over 35 per cent, fine dining grew by almost 40 per cent in 2010. Apparel and accessories, watches and personal care witnessed a substantial growth rate, between 24-30 per cent.
Similarly, India has surpassed the US to become the third largest men's luxury jewellery market in the world in 2011, stated the researcher Euromonitor International. The researcher's study projected Indian men's jewellery market at Rs 954 crore (US$ 183.76 million) in terms of sales and made an anticipation for it to grow 36.4 per cent in 2012.
Retail: Major Developments and Investments
After the US, Germany has also come up in full support of FDI in retail in India. Metro AG, one of the prominent German retail chains, has shown intentions to venture in Indian markets along with US' Wal-Mart and France's Carrefour.
Cumulative FDI inflows in single-brand retail trading during April 2000 to September 2011 stood at US$ 44.45 million, according to the Department of Industrial Policy and Promotion (DIPP).
Certain developments and investments that took place on the Indian retail canvas recently are discussed below-
- Real estate major DLF's subsidiary DLF Brands has struck a deal with Chicago-based Claire's Stores Inc to bring the latter to India and open its 75 stores over 2011-16. Claire's is a specialty retailer which targets young girls through over 3,000 stores globally.
- French retail chain, Carrefour is on an expansion spree in India wherein it is about to finalise lease deals across 10 to 12 sites in the country to open cash-and-carry (wholesale) outlets.
- The world's largest retailer Wal-Mart will open an innovation lab in Bengaluru by the end of 2011. The lab would be tasked to drive the US$ 422-billion company's next generation innovations that impact shopping behavior among the customers.
- US fast moving consumer good (FMCG) giant McCormick, that has recently formed a joint venture (JV) with Indian basmati rice brand Kohinoor Foods, intends to tap Indian packaged food industry and achieve sales of US$ 85 million in the first year of operations in the country.
- FMCG firm GSK Consumer Healthcare (GSKCH) has made a debut into Indian breakfast cereal market by launching oats cereal under its flagship brand ‘Horlicks'. The breakfast cereal market in India is currently dominated by PepsiCo and Kellogg's.
- Oral and dental hygiene products manufacturer Colgate Palmolive has decided to invest Rs 200 crore (US$ 38.52 million) to establish a greenfield facility at an upcoming industrial estate in Sanand which is being developed by state-run Gujarat Industrial Development Corporation (GIDC).
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