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Retail - Last Updated: February 2010

The Indian retail market, which is the fifth largest retail destination globally,has been ranked as the most attractive emerging market for investment inthe retail sector by AT Kearney's eighth annual Global Retail DevelopmentIndex (GRDI), in 2009. As per a study conducted by the Indian Council forResearch on International Economic Relations (ICRIER), the retail sector isexpected to contribute to 22 per cent of India's GDP by 2010.

With rising consumer demand and greater disposable income, the US$ 400billion Indian retail sector is clocking an annual growth rate of 30 per cent. Itis projected to grow to US$ 700 billion by 2010, according to a report byglobal consultancy Northbridge Capital. The organised business is expected

to be 20 per cent of the total market by then. In 2008, the share of organisedretail was 7.5 per cent or US$ 300 million of the total retail market.

A McKinsey report, 'The rise of Indian Consumer Market', estimates that theIndian consumer market is likely to grow four times by 2025. Commercialreal estate services company, CB Richard Ellis' findings state that India'sretail market has moved up to the 39th most preferred retail destination inthe world in 2009, up from 44 last year.

India continues to be among the most attractive countries for globalretailers. Foreign direct investment (FDI) inflows as on September 2009, in

single-brand retail trading, stood at approximately US$ 47.43 million,according to the Department of Industrial Policy and Promotion (DIPP).

India's overall retail sector is expected to rise to US$ 833 billion by 2013 andto US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10per cent. As a democratic country with high growth rates, consumerspending has risen sharply as the youth population (more than 33 percent ofthe country is below the age of 15) has seen a significant increase in itsdisposable income. Consumer spending rose an impressive 75 per cent inthe past four years alone. Also, organised retail, which is pegged at aroundUS$ 8.14 billion, is expected to grow at a CAGR of 40 per cent to touch US$

107 billion by 2013.

The organised retail sector, which currently accounts for around 5 per cent ofthe Indian retail market, is all set to witness maximum number of largeformat malls and branded retail stores in South India, followed by North,West and the East in the next two years. Tier II cities like Noida, Amritsar,Kochi and Gurgaon, are emerging as the favoured destinations for the retail

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sector with their huge growth potential.

Further, this sector is expected to invest around US$ 503.2 million in retailtechnology service solutions in the current financial year. This could go

further up to US$ 1.26 billion in the next four to five years, at a CAGR of 40per cent.

Moreover, many new apparel brands such as Zara, the fashion label ownedby Inditex SA of Spain, UK garment chain Topshop, the Marc Ecko clothingline promoted by the US entrepreneur of the same name and the Japanesecasual wear brand Uniqlo are preparing to open outlets in India.

Buoyed by improved consumer spending, sales of listed retailers increasedby 12 per cent in the September 2009 quarter compared with the same

period in 2008.

Australia's Retail Food Group is planning to enter the Indian market in2010. It has ambitious investment plans which aim to clock revenue ofUS$ 87 million from the country within five years from start ofoperations.

British retail major Marks & Spencer (M&S) is looking at scaling up itsIndia operations and plans to open at least 50 more outlets in thecountry over the next few years.

Koutons Retail India plans to open 200 stores in FY11 in addition to itsexisting 1,400. Of the 200 stores, 100 would be family concept stores,

which would include women and children's wear. Reliance Footprint, part of Reliance Retail, plans to spend US$ 86.62

million to add 100 outlets across the country in two years to sellbranded footwear. It currently has 16 outlets.

Retail chain Suvidhaa Infoserve plans to open 1,000-1,200 new outletsevery month across the country and is eyeing a 100,000 strongnetwork in the next two to three years. At present, the Mumbai-basedfirm has 18,000 convenient neighbourhood stores called 'SuvidhaaPoint' across the country in over 20 states and over 400 cities.

Lifestyle International, part of the Dubai-based US$ 1.5 billionLandmark Group, plans to have over 50 stores across India by 2012

13. These will include 35 Lifestyle stores for retailing apparel,cosmetics and footwear, besides 15 Home Centres that sell homefurnishing goods.

Watch maker, Timex India, is looking at increasing its presence in thecountry by adding another 52 stores by March 2011 at an investmentof US$ 1.3 million taking its total store count to 120.

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