Growth in the Indian Retail Sector

The retail sector in India has shown a healthy growth and is fast emerging as one of the largest sectors in the economy. The sector has grown from a level of US $ 201 Billion to a market size of US $ 425 Billion in 2010.

The Industry has been growing at a compound annual rate of 6.4% since 1998.

Source : EIU Euro Monitor

Retail Penetration in 2011

Organised retail in India is still in its nascent stage and hence offers immense potential. India currently has a small 6% penetration in organised retail , while a country like the US has a high  85% penetration. Given that there is a double digit economic growth projection for  India in the following decade, the future has immense potential for the growth of organised retail in India. 

The chart below shows  retail penetration across some countries.

Source : E&Y Report, Aranca Research                                

MONTHLY ECONOMIC REPORT - MINISTRY OF FINANCE

The monthly Economic Report issued by the Ministry of Finance, Goverment of India for the month of November 2011 can be accessed by following the link below

MONTHLY ECONOMIC REPORT - NOV 2011

This report is published on a monthly basis by the Ministry of Finance

RURAL BUYING DRIVES FMCG GROWTH

Noodles, macaronis and soft-drinks made rapid inroads into the rural markets driving up growth in the fast moving consumer goods (FMCG) industry - 10% by volume and 12% by value - in the first ten months of 2011. The consumption story for most part of last year dispelled slowdown fears as Indian rural households piped urban counterparts in growth sweepstakes.
Rural India had clocked a negative volume growth during 2010 (here volume growth is the increase in sales clocked over last year while value growth is volume growth plus price hikes). The urban FMCG market on the other hand, grew 4% by volume and 7% in value and was led by categories such as ready-to-eat mixes, deodorants, breakfast cereals and soups. Growth for personal care products such as toilet soaps, shampoos and household products stagnated compared to last year, while F&B space saw a healthy growth. Sources said the F&B market witnessed hectic action in rural India with players like ITC and Hindustan Unilever (HUL) leveraging their distribution muscle to push products in this category. ITC's Sunfeast noodles and HUL's Knorr brand of soups have been able to penetrate the hinterland leading to increase in the category reach. 
The FMCG biggie saw its personal, oral care and health supplements report strong growth in the rural markets. While the low-penetrated products in the F&B space witnessed good growth, detergents, washing soaps stagnated volume wise. In the urban market emerging categories, noodles, macaroni, vermicelli grew 20% in terms of volume, while ready-to-cook mix products saw a whopping 64% growth and soups grew by 20%. In the personal care category, which largely remained stagnant in the urban market, deodorants saw a 31% growth. 
There have been some concerns  over consumer spending with price hikes being taken across the board by FMCG companies to offset the impact of rising input costs. Because of healthy disposable income growth and lower absolute spends on FMCG products it hasn't impacted the consumption yet, however if there is uncertainty around income growth risks of down trading exist. 

Source :  Times of India (Electronic Edition): January 12, 2012