2019 is poised to be a transformational year for retail. Technology continues to change the rules of engagement; consumers are more demanding than ever, and getting them to notice your brand amid all the noise in the market is an even greater challenge.
AT Kearney’s study on global retailing trends found that India is the least competitive as well as least saturated of all major global markets. This implies that there are significantly low entry barriers for players trying to setup base in India, in terms of the competitive landscape. The report further stated that global retailers such as Walmart, Carrefour, Tesco and Casino would take advantage of the more favourable FDI rules that are likely in India and enter the country through partnerships with local retailers. Other retailers such as Marks & Spencer and the Benetton Group, who usually operate through a franchisee model, would most likely switch to a hybrid ownership structure.
A good talent pool, unlimited opportunities, huge markets and availability of quality raw materials at cheaper costs is expected to make India to overtake the world's best retail economies by 2042, according to industry players.
The Potential of the Indian Retail Sector
The high growth projected in domestic retail demand will be fuelled by:
The migration of population to higher income segments with increasing per capita incomes
There is retail opportunity in most product categories and for all types of formats
Opportunities for investment in supply chain infrastructure: Cold chain and logistics India also has significant potential to emerge as a sourcing base for a wide variety of goods for international retail companies. Many international retailers including Wal-Mart, GAP, JC Penney etc. are already procuring from India.
With the Private Final Consumption Expenditure expected to grow by about 12.5% y-o-y till 2020 (has grown at about 10-12% historically), GDP expected to go up to ~9%, CARE expects the retail industry to reach about USD 1,150 billion by 2020. With factors such as higher demand from consumers with higher incomes, job creations, improved standard of living, higher discretionary spends and higher participation of producers/retailers in the organised retail market, discounted and promotional pricing, increased number of products and more private labels with retailers among others, the industry is expected to register growth going forward. - The traditional retailers are expected to continue dominating the largest market share in the Indian Retail industry.
Dr Suman Kumar Dawn