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    The Most Promising and Booming Industry of Future Is

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    Prateek.S
    Retail in India is currently a $230 billion industry, with organized retail making up only 3%. However, several reports and studies expect organized retail to grow rapidly over the coming years, capturing 15-20% of the market by 2010 as it expands beyond major cities into smaller towns. While organized retail accounts for 70-80% of sales in developed countries, in India it remains far below the levels of other Asian countries such as China and Thailand. Allowing foreign direct investment could help organized retail grow through investments, technology, and skills transfers, but it may also negatively impact small retailers and farmers if global chains come to dominate the market.

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    The Most Promising and Booming Industry of Future Is

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    Prateek.S
    26 views5 pages
    Retail in India is currently a $230 billion industry, with organized retail making up only 3%. However, several reports and studies expect organized retail to grow rapidly over the coming years, capturing 15-20% of the market by 2010 as it expands beyond major cities into smaller towns. While organized retail accounts for 70-80% of sales in developed countries, in India it remains far below the levels of other Asian countries such as China and Thailand. Allowing foreign direct investment could help organized retail grow through investments, technology, and skills transfers, but it may also negatively impact small retailers and farmers if global chains come to dominate the market.

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    Retail reality

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    Retail in India is currently a $230 billion industry, with organized retail making up only 3%. However, several reports and studies expect organized retail to grow rapidly over the coming years, capturing 15-20% of the market by 2010 as it expands beyond major cities into smaller towns. While organized retail accounts for 70-80% of sales in developed countries, in India it remains far below the levels of other Asian countries such as China and Thailand. Allowing foreign direct investment could help organized retail grow through investments, technology, and skills transfers, but it may also negatively impact small retailers and farmers if global chains come to dominate the market.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    26 views5 pages

    The Most Promising and Booming Industry of Future Is

    Uploaded by

    Prateek.S
    Retail in India is currently a $230 billion industry, with organized retail making up only 3%. However, several reports and studies expect organized retail to grow rapidly over the coming years, capturing 15-20% of the market by 2010 as it expands beyond major cities into smaller towns. While organized retail accounts for 70-80% of sales in developed countries, in India it remains far below the levels of other Asian countries such as China and Thailand. Allowing foreign direct investment could help organized retail grow through investments, technology, and skills transfers, but it may also negatively impact small retailers and farmers if global chains come to dominate the market.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Retail reality

    I. Introduction:
    The most promising and booming industry of future is
    retailing.

    According to a Knight Frank survey, India ranks fifth


    amongst the 30 emerging retail markets in the developing
    countries
    AT Kearney, a well-known international management
    consultancy, recently identified India as the the most
    attractive retail destination globally from among thirty
    emergent markets (2007).
    Industry evolution
    Traditionally, retailing in India can be traced to the emergence
    of the Corner stores (Kirana) catering to the convenience of
    the consumers
    Era of government support for rural store chains run by Khadi
    & Village Industries Commission
    1980s experienced slow change as India began to open
    up economy.
    Textile sector with companies like Bombay Dyeing,
    Raymond's, S Kumar's and Grasim, saw the emergence of
    retail chains
    Later, Titan successfully created an organized retailing

    concept and established a series of showrooms for its premium


    watches

    The latter half of the 1990s saw a fresh wave of entrants


    with a shift from Manufactures to Pure Retailers. For e.g. Food
    World, Subhiksha and Nilgiris in food and FMCG; Planet M and
    Music World in music; Crossword and Fountainhead in books.
    1995 onward Emergence of hyper and super markets
    saw mainly in urban areas, trying to provide customer with
    3 Vs - Value, Variety and Volume
    The Sachet revolution - example of reaching to the bottom
    of the pyramid. Expanding target consumer segment:

    The retail industry is divided into organized and unorganized


    sectors.
    Organized retailing refers to trading activities undertaken by
    licensed retailers, that is, those who are registered for sales
    tax, income tax, etc.
    These include the corporate-backed hypermarkets, retail
    chains,
    Unorganized retailing, on the other hand, refers to the
    traditional formats of low-cost retailing,
    for example, the Corner stores (Kirana shops),
    Retailing in India is currently estimated to be a US$ 230

    billion industry, of which organized retailing makes up 3


    percent.
    A study conducted by Fitch, expects the organized retail
    industry to continue to grow rapidly, especially through
    increased levels of penetration in larger towns and metros and
    also as it begins to spread to smaller cities and B class towns.
    Fitch expects organized retail to capture 15%-20% market
    share by 2010.

    While organized retail makes up for over 70-80 per cent of the
    total business in developed countries, the Indian organized
    retail segment pales in comparison with other Asian countries
    such as ChinaSouth Korea and Thailand.
    Retailing is the largest private sector industry in the world
    economy, with the global industry size exceeding $6.6 trillion,
    according to Euromonitor.
    In China, the organized retail segment accounts for about 20
    per cent of the overall business; in Thailand, it is around 40 per
    cent, while in Malaysia it makes up for nearly 50 per cent of the
    total business, according to the data.
    The retail sector in India is highly fragmented and organized
    retail in the country is at a very nascent stage.
    Of the 12 million retail outlets, more than 80 per cent are run
    by small family business, which use only household labour
    . China and Brazil, took 10-15 years to raise the share of their
    organized retail sectors from 5 per cent to 20 per cent and 38
    per cent respectively. I

    ndia too is moving towards growth and maturity in the retail


    sector at faster pace, according to Ernst and Young India.
    According to the E&Y India Retail Report:
    Hypermarkets to be the preferred format for the international
    retailers entering India
    Malls to move beyond the metros, increase presence in tier II
    cities
    Organized retail penetration highest across footwear, clothing
    segment.
    Franchising gaining steam with retailers.

    Modernization of the Indian retail sector will be reflected in


    rapid growth in sales of supermarkets, departmental stores and
    hypermarts. Sales from these large-format stores are set to
    expand at growth rates ranging from 24% to 49% per year
    during 2003-2008, according to a report by Euromonitor
    International, a leading provider of global consumer-market
    intelligence.

    The trends that are driving the growth of retail sector in India
    are:
    Low share of organized retailing
    Falling real estate prices
    Increase in disposable income and customer aspiration
    Increase in expenditure for luxury items

    Foreign Direct Investment (FDI) has both advantages and


    disadvantages. Since the advantages are more than the
    disadvantages, I think we should go for FDI in retail sector.
    FDI is a cross border investment, that is, foreign assets are
    invested in organizations of domestic market, excluding
    investment in stock. In developing countries FDI has become a
    vital part in their economy. The availability of cheap labour,
    uninterrupted supply of raw materials, less production cost and
    quick and easy market penetration have made FDI feasible.
    If FDI is allowed in India, it will result in the cheap production
    facilities, application of new technology and long term cash
    liquidity. FDI ensures better operations in production and
    distribution cycles. It enables transfer skills and technology
    from overseas and develops the infrastructure of the domestic
    country.
    FDI provides the capital necessary for setting up organized
    chain of retail stores. The physical capital invested is not easily
    liquidated.
    On the other hand, FDI can lead to a large scale job loss. Small
    scale retail business has virtually be wiped out in developed
    countries like the USA and in Europe.
    Global retailers will create monopoly in this field.
    This can adversely affect the supply of essential items. For
    instance, food supply will be controlled by foreign companies.
    The farmers barely subsist while the middlemen take the
    cream. This will lead to an unequal relationship in the market.
    Moreover, the retail industry which consists of individual stores,
    commercial complexes, agencies, companies and organizations
    constitutes a major chunk of Indian economy.
    FDI in retail sector may strike a fatal blow on the unorganized
    retail business, which is a source of income for millions.

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