Introduction to Retail Industry:

Retailing is the largest industry in India is about 8% of jobs and contribute over 10% of GDP in the country. Retailing in India is expected that 25% of the year, driven by strong income growth, ranging from changing lifestyles and favorable demographic trends. It is hoped that by 2016 modern retail in India is U.S. $ 175-200000000000. Retailing is one of the fastest growing industries with annual sales in 2008 should amount of U.S. $ 320,000,000,000 and increase annually by 5 % rate. Further growth of 7-8% of the retail business in Germany is expected to increase in consumption in urban areas, rising incomes and a sharp increase in consumption in rural areas. It was also predicted that retail sales in India amounts to U.S. $ 21 5 billion from the current size of $ 2010, 7 USA. 5000000000th India Trade Centre, revolutionary change in consumers’ purchasing patterns, and the whole shopping experience and formal transformations. The retail sector in India, which has become fashionable, the fact that it is stored for a number of shopping malls, large shopping malls, and large complexes, food, shopping and entertainment centers offer K & # xF5; igile under the same roof.

 

Scope of the Retail Market:

The scope of the Retail Market is immense for this sector is poised for the highest growth in the next 5 years. The Retail Industry contributes 10% of the countries GDP and its current growth rate is 8. 5%. In the Retail Market the scope for growth can be seen from the fact that it is expected to rise to US$ 608. 9 billion in 2009 from US$ 394 billion in 2005. The organized retailing sector in India is only 3% and is expected to rise to 25- 30% by the year 2010. There are under construction at present around 325 departmental stores, 300 new malls, and 1500 supermarkets.

The scope of the Retail Market have been seen by many retail giants and that’s the reason that many new players are entering the Retail Industry. The major Retailers are:

Judging the scope for growth in the Retail Industry many global retail giants are also entering the

Retail Market. They are :

Organized Retail Market:

Organized retail market is growing at a fast pace due to the boom in the Retail Industry. In 2005, the retail industry in India amounted to Rs 10,000 billion accounting for about 10% to the country’s GDP. The organized retail market in India out of this total market accounted for Rs 350 billion which is about 3. 5% of the total revenues.

Retail market in the Organized sector is expected to cross    Rs 1000 billion by 2010. Traditionally the retail industry in India was largely unorganized, comprising of drug stores, medium, and small grocery stores.   Most of the organized retailing in India have started recently and is concentrating mainly in metropolitan cities. The growth in the Organized retail market is mainly due to the change in the consumers behavior. This change has come in the consumer due to increased income, changing lifestyles, and patterns of demography which are favorable. Now the consumer wants to shop at a place where he can get food, entertainment, and shopping all under one roof. This has given Organized retail market a major boost. Retail market in the organized sector in India is growing can be seen from the fact that 1500 supermarkets, 325 departmental stores, and 300 new malls are being built. Many Indian companies are entering the Retail Market which is giving Organized retail market a boost. One such company is the Reliance Industries Limited. It plans to invest US$ 6 billion in the Retail Market by opening 1000 hypermarkets and 1500 supermarkets.

Pantaloons is another Indian company which plans to increase its retail space to 30 million square feet with an investment of US$ 1 billion. Bharti Telecoms an Indian company is in talks with Tesco a global giant for a £ 750 million joint venture. A number of global retail giants such as Wal-Mart, Carrefour, and Metro AG are also planning to set up shop in India. Organized retail market will definitely grow as a result of all this investments. Organized retail market is increasing and for this growth to continue the Retailers as well as government must make a combined effort

 

Growth Factors in Organized Retail sector:

Growth of organized sector is very diverse, but this is mainly due to the fact that the Indian economy is booming on all fronts.

Also, the rise in the working population which is young, pay- packets which are hefty, more nuclear families in urban areas, rise in the number of women working, more disposable income and customer aspiration, western influences and growth in expenditure for luxury items. All these are the factors for the growth in Organized retail sector. In fact, Retail Industry is the fastest growing industry in India and it accounts for 10% of the country’s GDP. In 2006, the retail industry in India amounted to US$ 200 billion and out of this, the organized retail sector in India amounted to US$ 6. 4 billion. By 2010, the Organized retail sector is expected to rise to US$ 23 billion. In 2003, the Organized retailing sector accounted for more than 4. 5 million sq. ft of space absorption by malls.

The factors for growth in Organized retail sector are many and that is the reason behind its massive growth. But for this to continue both the Retailers and the government will have to work together.

 

Opportunities in Organized Retail sector:

The opportunities in Organized retail sector are many for this sector is witnessing a boom.

The retail industry in India amounted to US$ 200 billion in 2006, and out of this amount the Organized retail sector amounted to US$ 6. 4 billion. The opportunities in Organized retail sector can be judged from the fact that by 2010 it is expected to rise to US$ 23 billion. The various opportunities in the organized retail sector in India are mainly there for the Indian consumers behavior pattern has changed. Now the Indian consumer gets more hefty pay- packages, is younger, a large number of women are working, western influences, and more disposable income have opened a lot of opportunities in Organized retail sector. The Indian consumer wants to shop, eat and get entertainment in one place and is have also given Organized retail sector an opportunity to grow.

The Indian government in 2005 allowed foreign direct investment (FDI) in single brand retail to 51%. This have opened up a lot of opportunities in Organized retail sector. In fact 325 departmental stores, 300 new malls, and 1500 supermarkets are being built which shows the tremendous opportunities in the organized retail sector in India.

 

The challenges of organized retailing sector:

The challenges facing the Organized retail sector are various and these are stopping the Retail Industry from reaching its full potential. The behavior pattern of the Indian consumer have undergone a major change. This have happened for the Indian consumer is earning more now, western influences, women working force is increasing, desire for luxury items and better quality. He now wants to eat, shop, and get entertained under the same roof. All these have lead the Organized retail sector to give more in order to satisfy the Indian customer.

The biggest challenge facing the Organized retail sector is the lack of retail space. With real estate prices escalating due to increase in demand from the Organized retail sector, it is posing a challenge to its growth. With Retailers having to shell out more for retail space it is effecting there overall profitability in retail.

Trained manpower shortage is a challenge facing the organized retail sector in India. The Retailers have difficultly in finding trained person and also have to pay more in order to retain them. This again brings down the Retailers profit levels.

The challenges facing the Organized retail sector are there but it will have to be dealt with and only then this sector can prosper.

 

Role of Supply Chain in Organized Retail:

The role of supply chain in Organized retail is very significant for on it depends the growth of this sector. The Indian Supply Chain Council have been formed to explore the challenges that a retailer faces and to find possible solutions for India.

The role of supply chain in the organized retail sector in India should be a shelf- centric partnership between the retailer and the manufacture for this will create supply chains that are loss free. This will also give rise to top and bottom line growth. In the organized retail sectorin India the presence of fresh produce (vegetables and fruits) is very small. This is so for the nature of supply chain is very fragmented. This shows the important role of supply chain in the organized retail sector in India.

The role of supply chain in Organized retail has expanded over the years with the boom in this industry. The growth of the Retail industry to a large extent depends on supply chain, so efforts must be made by the Retailers to maintain it properly.

 

Employment Generation by Organized Retail Sector:

Lots of employment generation by Organized Retail Sector in the near future.

India is undergoing a radical change in the economy. Although this is a very early stage, people can feel the climate is changing. The majority of unorganized retailers for the retail sector, but the organized retailing has grown rapidly and promises to increase the proportion of 90 – 10% by 2010. It is the largest sector of the agricultural sector. The growing number of consumers in the introduction of organized sector in the partner city has launched a number of corporate investment in retail. Entry of supermarkets, department stores and shopping malls has encouraged a huge retailers are looking for new business plans extension.

An economic growth on a monumental scale is offered by the Retail sector, equally in the national  and international market which in turn will generate a huge source of employment and a variety of options for the consumers. The Ernst & Young’s report ‘The Great Retail Story’, anticipates that the Retail sector would come up with 2 million employment opportunities within the year 2010.

 

Emerging trends in Organized retail sector:

The emerging trends in the Organized retail sector would help the economic growth in India.

There is a fantastic rise in the Organized retail sector in a very short period of time between 2001 and 2006. Eventually, out of the shadows of the unorganized retail sector, India has a chance of tremendous economic growth, both in India and in foreign countries. The emerging trends in the Organized retail sector are also adding up to the development of the Organized retail sector. The relaxation by the government on regulatory controls on foreign direct investments has added to the process of the growth of the Organized retail sector. The growth of the Organized retail sector is anticipated to be heavier than the growth of the gross domestic product. Alterations in people’s lifestyle, growth in income levels, and encouraging conventions of demography are proving favorable for the new emerging trends in the Organized retail sector.

The success of this retail sector would also lie in the degree of penetration into the lower income strata to tap the possible customers in the lowest levels of society. The demands of the buyers would also be enhanced by more access to credit facilities. With the arrival of the Transnational Companies (TNC), the Retail sector will undergo a transformation. At present the Foreign Direct Investments (FDI) is not encouraged in the Organized retail sector but once the TNC’S get in they inevitably try to oust their Indian counterparts. This would be challenging to the retail sector in India. The trends to follow in the future:

 

Conclusion:

Retail industry in India is at the crossroads but the future of the consumer markets is promising as the market is growing, government policies are becoming more favorable and emerging technologies are facilitating operations in India. And this upsurge in the retail industry has made India a promising destination for retail investors and at the same time has impelled investments in the real estate sector. As foreign investors cautiously test the Indian Markets for investments in the retail sector, local companies and joint ventures are expected to be more advantageously positioned than the purely foreign ones in the evolving India’s organized retailing industry. To conclude, it can be said that though the global retail industry has reached its maturity, the Indian retail industry is still at its infancy. But with the huge potentiality existing in the Indian market, it is expected to grow in leaps and bounds in the near future.


Article Source:China Sourcing Blog

Popularity: unranked [?]