Investment Opportunities in the Retail Sector

      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 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 overtake the world's best retail economies by 2042, according to industry players. The retail industry in India, according to experts, will be a major employment generator
in the future. Currently, the market share of organised modern retail is just over 4 percent of the total retail industry, thereby leaving a huge untapped opportunity.
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
• An increase in urbanisation
•  Changing consumer attitudes especially the increasing use of credit cards
•  The growth of the population in the 20 to 49 years age band

There is retail opportunity in most product categories and for all types of formats

• Food and Grocery: The largest category; largely unorganised today
•  Home Improvement and Consumer Durables: Over 20 per cent p.a. CAGR estimated in the next 10 years

• Apparel and Eating Out: 13 per cent p.a. CAGR projected over 10 years

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.

      The sector is expected to see an investment of over $30 billion within the next 4-5 years,catapulting modern retail in the country to $175-200 billion by 2016, according to Technopak estimates.Of the total organised retail market of Rs 550 billion, the business of fashion accounts for Rs 300.80 billion, which translates into nearly 55 per cent of the organised retail segment in the country.

      Total fashion sector was estimated at Rs 1,914 billion and forms about 15 per cent of the country's retail market of Rs 12,000 billion. Commanding such a large chunk of the organised retail business in India, fashion
retailing has indeed been responsible for single-handedly driving the business of retail in India.