' India Fifth most Attractive Retail Market '

Despite the recent flip-flops over enhancement of FDI cap in the retail sector, India has emerged as the fifth most favorable destination for international retailers, outpacing UAE, Russia, Indonesia and Saudi Arabia.

"India remains a high potential market with accelerated retail growth of 15-20% expected over the next five years. Growth is supported by strong macro economic conditions, including a 6-7% rise in GDP, higher disposable incomes, and rapid urbanization," said a recent report by global management consultancy firm A T Kearney.

The approval of 100% FDI in single brand retail, especially, will give a fillip to the sector in the country prompting several international retail chains to explore the market either on their own or through local partners, the report said.

Companies such as GAP, IKEA, Abercrombie & Fitch have already stepped up inquiries for an entry into the market, despite the rider of 30% local sourcing for single brand foreign retail chains.
  
According to the entity's Global Retail Development Index (GRDI) 2012, India ranks fifth after Brazil, Chile, China and Uruguay.

With the developed markets witnessing an economic turmoil, emerging countries are fast becoming the retail hotspot for foreign brands, with most of them seeing faster growth here compared to their home markets.

In the past five years, retail chain giants like Walmart, Tesco, Metro Group, saw revenues in developing countries grow 2.5 times faster than their home markets, the report said.

Even in the food and beverage industry, India is fast becoming an important investment destination for foreign players with companies like Starbucks which is planning to enter India this year and American brand Dunkin' Donuts which recently entered the country in partnership with local franchisee Jubilant FoodWorks.

The Times of India. June 27, 2012

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                                

RETAIL IN INDIA

Some Facts and Figures about Retail in India :

RETAIL SALES in India will grow from the US$395.96 Billion ( Rs 17818.20 Billion) in 2011 to US$ 785.12 Billion ( Rs 35330.40 Billion) by 2015. (Source : Business Monitor International)

Sales through MGR outlets ( Mass Grocery Retail) is expected to increase by 218% by 2015 to reach a level of US$ 27.67 billion ( Rs 1245.15 Billion)

Organised retail in India is expected to increase from 5 per cent of the total market in 2008 to 14-18 per cent and reach US$ 450 billion by 2015, according to a McKinsey & Company report titled 'The Great Indian Bazaar: Organised Retail Comes of Age in India'.

By 2012, around 55 million square feet of retail space will be ready in the national capital region ( NCR), Kolkata, Mumbai, Chennai, Bengalaru, Hyderabad and Pune. The organised retail real estate stock will therefore grow from the existing 41 million sq ft to 95 million square feet. ( Source : India Organised Retail Market 2010 by Knight Frank India)

According to the report ‘Strong and Steady 2011’ released by global consultancy and research firm PricewaterhouseCoopers (PwC), India's retail sector, which is currently estimated at about US$ 500 billion, is expected to grow to about US$ 900 billion by 2014.

According to a report by KPMG, food retail sector in India is set to more than double to by 2025 to US$ 150 Billion ( Rs 6750 Billion). This would be driven by growth of organised report coupled with changing consumer habits.

AT Kearney in its 9th annual Global Retail Development Index (GRDI) 2010 has ranked India as the 3rd most attractive nation for retail investment among 30 emerging markets.

Foreign direct investment (FDI) inflows between April 2000 and January 2011, in single-brand retail trading, stood at US$ 128.34 million, according to the Department of Industrial Policy and Promotion (DIPP).

Source : IBEF

FUTURE GROUP EYES VISHAL RETAIL

Reports are afloat that Kishore Biyani is in the race to take over the troubled Vishal Retail Ltd.

TGP Capital has already bid to acquire Vishal Retail. TPG has already obtained the approval of a consortium of lenders to purchase Vishal in March. The Indian retailer’s board had last month approved a non-binding, non-exclusive memorandum of understanding for talks with TPG.

Biyani on being asked declined to confirm or deny the report. . “I am not saying anything on that (topic). I am not commenting,” he said.
 Amol Jain, director of TPG, declined to comment while Vishal’s managing director Ram Chandra Agarwal denied that there was any proposal from the Future Group.
 Vishal’s bankers, including State Bank of India, HDFC Bank Ltd and ING Vysya Bank Ltd among others, are currently engaged in the restructuring of debt amounting to Rs730 crore.

Mint220710

Retail in India - Some Facts

Population of India
1.1 Billion
Middle Class : 300 million
Size of the Sector
Annual sales in The Retail Sector in India is estimated at Rs 24,300 Billion ( $ 540 Billion) . 80% of this in the unorganised sector - mainly small Mom & Pop stores. ( Source ATKearney).
Organised Retail
Currently at Rs 1500 Billion ( $ 32 Billion) or 6% of the total retail sector. This segment is growing at 2% ( Source NCAER)
Consumption
People living in small towns and villages account for 59% of Consumer Durables such as refrigerators and Washing Machine sales. These towns and villages also account for 53% of Consumer Goods like soaps, detergents and shampoos.(Source NCAER).
Rural India
Rural India has shown consistent and robust growth for the last 4 years . It was only the last season that saw a slight downturn because of the poor monsoon. A Rs 1755 Billion ( $39 Billion) stimulus package was specially introduced for development of rural infrastructure. An added stimulus is the $16 Billion (Rs 716 Billion) loan waiver scheme for farmers along with the $ 7 Billion ( Rs 300 Billion) job scheme introduced by the Government of India for rural India.

STOCK SHRINKAGE

One problem that all retailers around the world face is Stock Shrinkage - loss of goods from employee theft, shop lifting and vendor fraud. In India, the problem is particularly acute with shrinkage accounting for 3.1% of total sales . This amounts to a colossal amount of $2.5 Billion ( Rs 122.5 Billion) per year ( source : The Global Theft Barometer 2008)
A huge 45 to 50 % of this stock shrinkage is on account of Employee theft, 30 to 35% is due to shoplifting by consumers and the balance being attributed to vendor fraud/administrative lapses etc.

Globally , the average figure for shrinkage is 1.34% of sales. India however has an abnormally high 3.1% of sales. Compare this to 1.48% of The United States and 1.3% of UK.

Some common measures taken by retailers are CC TV monitoring, frisking of employees etc. These however do not seem to be enough and major retailers in India have now come together to combat the menace of Shrinkage particularly employee theft. These include Reliance Retail, Future Group, Spencers and Aditya Birla retail who will share notes on employees found guilty of theft. The current practice is to dismiss employees caught stealing who however do not face problems getting employed by any other retailer as there is almost no system of cross reference from previous employers. The plan is to circulate a blacklist of defaulting employees to prevent them to be employed by others.
Hopefully this will bring down shrinkage to some extent.

Top Retailers of the World

This is a list of top retailers in the world with their ranking in world trade.

The biggest of course is Wal-mart with a turnover of US$ 410 billion which is larger than the domestic product of 39 countries of the world. In a sense Walmart almost qualifies as a country by itself

Figures in Brackets is the rank in world trade and the first no is rank as retailer.

1. (8)         Wal-Mart, US                                      2. (83)      CVS Caremark, US
3.(127)     Home Depot, US                                4. (137)    Target, US
5.(166)     Lowe's, US                                          6.(186)      Walgreen, US
7.(257)     Costco Wholesale, US                       8.(288)      PPR, France
9.(298)     Best Buy, US                                      10.(457)      Ebay, US
11.(459)   Staples, US                                        12.(469)     Marks & Spencer, UK
13.(477)   Aeon, Japan                                       14.(494)     Kohl's, US
15.(520)   Amazon.com, US                               16.(561)  H&M Hennes & Mauritz, Sweden
17.(597)   Kingfisher, UK                                    18.(640)   Gap, US
19.(655)   TJX Cos, US                                       20.(706)  Lotte Shopping, South Korea
21.(718)   Macy's, US                                          22.(728)  JC Penney, US
23.(739)   Sears Holdings, US                           24.(774)   Shinsegae, South Korea
25.(845)   Yamada Denki, Japan                       26.(880)   Isetan Mitsukoshi Holdings, Japan
27.(895)   Home Retail Group, UK                     28.(904)    AutoZone, US
29. (935)  Shoppers Drug Mart, Canada           30.(962)   Sherwin-Williams, US
31.(966)   Esprit Holdings, Hong Kong/China
32.(1002)    Bed Bath & Beyond, US         33. (1016)  Fast Retailing, Japan
34.(1039)    Falabella, Chile                                35.(1055)    Suning Appliance, China
36.(1058)    Cencosud, Chile                               37.(1095)    Next, UK
38.(1101)    GameStop, US                                 39.(1106)    Arcandor, Germany
40.(1165)    Grupo Elektra, Mexico                     41.(1208)    Nordstrom, US
42.(1232)    Rite Aid, US                                      43.(1271)    Ross Stores, US
44.(1307)    Liberty Media-Interactive, US
45.(1352)    Family Dollar Stores, US
46.(1362)    Daiei, Japan                                     47.(1364)   Canadian Tire, Canada
48.(1384)    Inchcape, UK                                    49.(1412)   Limited Brands, US
50.(1482)    DSG International, UK                     51.(1517)   Advance Auto Parts, US
52.(1557)    El Puerto de Liverpool, Mexico
53.(1601)    J Front Retailing, Japan                 54.(1603)   Dollar Tree, US
55.(1627)    Fastenal, US                                    56.(1671)   D'Ieteren, Belgium
57.(1676)   Takashimaya, Japan                        58.(1689)   AutoNation, US
59.(1714)   Office Depot, US                              60.(1734)  Carphone Warehouse, UK
61.(1817)   Penske Automotive Gp, US
62.(1845)   Soriana, Mexico                               63.(1888)  O'Reilly Automotive, US
64.(1902)   Pendragon, UK                                65.(1906)   BJ's Wholesale Club, US
66.(1925)   CarMax, US                                     67.(1998)   Kesa Electricals, UK

No Indian retailer finds a place amongst the top 2000 companies in terms of trade ranking,