Investment Opportunity in Retail Sector

Retail Sector of India

India is second most populated country of the world. It is the third largest economy of the world. The presence of healthy middle class population ensures huge prospect in the growth of retail sector. This sector is opened recently by the government of India for the foreign players. Keeping the size of India in mind, the retail sector is not very developed and there are huge prospects for its growth and development. India is one of the ten largest retail markets in the world. In 2004, the total retail sales were $206 billion. Out of these $206 billion, organized Retail was just 3% of total retail sales that is $6.4 billion p.a. Organized retail is however picking up very fast and it is growing with an average growth rate of over 20% p.a. in the last 5 years

Structure
The retail sector of India is not well organized. There are over 12 million retail outlets with an average outlet size of less than 500 sq.ft. Retail Chains of India are of mid size. Some of the important retail chains of India are Pantaloon, Shoppers’ Stop, Food world (RPG Group) and Westside (Tata Group). These retail chains mainly deal with apparel and the grocery items. Apart from the Indian retail chains foreign retail chains are also present in India. Some which are Dairy Farm, Metro, Shop rite and Marks & Spencer. However these international brands have a marginal presence through either franchisee or wholesale formats
Top Players in Retail Industry





Government Policy for the Retail Sector

• 100% FDI is permitted in Cash and Carry Wholesale formats
• Franchisee arrangements are allowed For single brand product, FDI upto 51% is permitted

Investment and Business Potential

• It is expected that by 2015 the retail sector market would grow to the size of $660 billion
• In the next ten years, India would be among the top 5 retail markets in the world
• By 2015, the organized retail is expected to grow to $100 billion and would constitute 12-15% of total retail sales.
• The domestic retail sector will grow due to increase of high income population, increasing urbanization, Increasing use of credit cards by the consumers, rising Population especially between the 20 to 49 years age band
  

There are huge opportunities in the following sector:

1. Food and Grocery
2. Home Improvement
3. Consumer Durables
4. Apparel and Eating Out

• The sector also provides opportunity to the investors to invest in a supply chain infrastructure. India is also emerging as one of the important sourcing base for a wide variety of goods for international retail companies. Some of the international brands like Wal-Mart, GAP, JC Penney etc. are already procuring from India