MONTHLY ECONOMIC REPORT – MINISTRY OF FINANCE

Issued by the Ministry of Finance, Goverment of India.

MONTHLY ECONOMIC REPORT - OCTOBER 2010

RETAIL SHRINKAGE STILL HIGHEST IN INDIA

In an annual survey conducted by the Centre for Retail Research in Nottingham, UK, the Indian retail sector lost Rs 9296 crores (USD 2065 Million) to theft and shoplifting. As per the Global Retail Theft Barometer Study, India has the dubious distinction of having the highest rate of retail shrinkage in the world. In India, 47.3% of retail shrinkage was due to shoplifting and 26.4% due to employee theft. The highest rate of shrinkage was seen in Apparels.
 
Globally, retail theft was estimated at US $ 107.3 Billion which translates into 1.36% of total retail sales for the period July 2009 – June 2010 which is reduction from the previous year’s 1.43 %. As per the study , the lowest rate of shrinkage was seen in Taiwan which stands at 0.87% of retail sales. The average rate in the Asia-Pacific region was 1.16%.
 The decrease in shrinkage over the previous year was primarily due to increased spending by retailiers on loss prevention and security which went up by 9.3% to US$ 26.8 Billion.
Source : PTI23112010

DHANTERAS & DIWALI RETAIL SALES HIT THE ROOF

This Diwali season saw unprecedented sales by retailers, consumer durables companies, apparel outlets and jewellers with consumers going on a buying frenzy across the country. The only exception was  Punjab and to some extent Haryana which were very recently affected by floods.
Retailers and companies have reported a healthy year-on-year growth ranging from 20 to 80% growth. And this growth is not restricted to urban India. Retailers in rural India have shown growths from 80 to 120% growth in sales during this period. In rural India, this growth has been majorly driven by CDIT - specially white goods and appliances though other household goods - particulary kitchen products, apparel and Food & Groceries have also shown very robust growth.
There is a growing belief and confidence  that this consumer confidence will remain high on the back of a good monsoon, rising incomes, positive economic forecasts and a booming stock market. 
Retailers reported about 25% jump in average bill size, as demand for premium products such as flat-panel televisions, double-door refrigerators, fully-automatic washing machines, home theatres, branded gold and diamond jewellery, fashion apparel, imported gifts and branded furniture soared with consumers upgrading their household items. The fear mindset of consumers has completely vanished.

Source : Economic Times, RM reseach team

FDI IN MULTI BRAND RETAIL

There are strong indications that Foreign Direct Investment ( FDI ) in multi brand retailing will soon be a reality. Indications are that there would be cap of 26% on investments allowed.  Sources say that a political consensus has been hammered out at the highest levels of UPA and influential wings of the government including the PMO, Finance Ministry, Agriculture Ministry and the Planning commission are backing this important economic reform.

FDI in retail could transform the way agriculture produce is procured, stored, conserved and marketed in the country.


Source : Financial Express: November 18, 2010

HAPPY DIWALI

WISH YOU ALL A HAPPY AND PROSPEROUS DIWALI

RURAL CONSUMER MARKET GROWTH STORY

It is now the turn of rural India to mirror the growth story of urban India. The rural consumer market, which grew 25 per cent in 2008, is expected to reach Rs 19125 Billion (US$ 425 billion)  in 2010-11 with 720-790 million customers, according to a white paper prepared by CII-Technopak . The figures are expected to double the 2004-05 market size of Rs 9900 Billion (US$ 220 billion).
FMCG
According to figures released by market researcher Nielsen, demand for personal care products grew faster in rural areas than urban areas during the period January-May 2010.
In shampoos, rural demand grew by 10.7 per cent in value terms, while in urban markets, it rose by 6.8 per cent. Similarly, toothpaste sales grew by 9.1 per cent in rural India and by 4.4 per cent in urban markets.
Retail
The rural retail market is currently estimated at Rs 5000 Billion (US$ 112 billion), or around 40 per cent of the Rs 12,500 Billion (US$ 280 billion) Indian retail market, according to a study paper, 'The Rise of Rural India', by an industry body.
Hindustan Unilever (HUL) is planning to significantly increase its rural reach. According to Harish Manwani, Chairman, HUL, the quality and quantity of rural coverage will go up to the extent that "what we have done in the last 25 years we want to do it in the next two years." Currently HUL products reach approximately 250,000 rural retail outlets and the company intends to scale it up to nearly 750,000 outlets in two years time.
Automobiles
Car sales in rural India have been on the increase in the last three years since the government announced various schemes such as farm loan waiver etc, for the rural population.
Maruti Suzuki's share of rural sales has increased from 3.5 per cent to 17 per cent in the last three years. Mahindra & Mahindra (M&M) is now selling more Scorpios in rural and semi-urban markets. Scorpio sales have increased from 35 per cent to 50 per cent in the last two years.
Exciting days ahead for Rural India !!