8/3/2019 The Indian Retail Industry is the Fifth Largest in the World

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The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized

sectors, India retail industry is one of the fastest growing industries in India, especially over the last

few years. Though initially, the retail industry in India was mostly unorganized, however with the

change of tastes and preferences of the consumers, the industry is getting more popular these days

and getting organized as well. With growing market demand, the industry is expected to grow at a

pace of 25-30% annually. The India retail industry is expected to grow from ` 35,000 crore in 2004-05to ` 109,000 crore by the year 2010.

n the Indian retailing industry, food is the most dominating sector and is growing at a rate of 9%

annually. The branded food industry is trying to enter the India retail industry and convert Indian

consumers to branded food. Since at present 60% of the Indian grocery basket consists of non-

branded items.

Growth of Indian Retail

It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion. India

retail industry is one of the fastest growing industries with revenue expected in 2007 to amount US$

320 billion and is increasing at a rate of 5% yearly. A further increase of 7-8% is expected in the

industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise

in rural consumption. It has further been predicted that the retailing industry in India will amount to

US$ 21.5 billion by 2010 from the current size of US$ 7.5 billion.

According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney, India retail

industry is the most promising emerging market for investment. In 2007, the retail trade in India had

a share of 8-10% in the GDP (Gross Domestic Product) of the country. In 2009, it rose to 12%. It is

also expected to reach 22% by 2010.

According to a report by Northbride Capita, the India retail industry is expected to grow to US$ 700billion by 2010. By the same time, the organized sector will be 20% of the total market share. It can

be mentioned here that, the share of organized sector in 2007 was 7.5% of the total retail market.

Nasscom

The retail sector is a fast growing adopter of technology in India. Read µRetail Round-up¶ to

 get a an overview of this market and key buy-side trends. 

Growing at 35-40% every year, the Indian retail sector, is the fifth largest in the world. Worth

over USD 400 billion today of which organized retail accounts for around USD 21 billion(Source: Technopak 2011), the sector is growing rapidly on the back of multiple formatsmushrooming across the country even as unorganized retailers spruce up their act.

Unorganized retail accounts for over 90% of the market today, but as Siva Rangaswamy,CEO, India, Groupsoft, points out, a lot of unorganized retailers are improving service qualityand in-store ambience, which blurs the line between them and the structured retail market.This is reflected in a McKinsey Institute prediction that organized retail in India is expectedto increase from 5% of the total market to 14-18% of the total retail market by 2015.

8/3/2019 The Indian Retail Industry is the Fifth Largest in the World

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The 2009 Images India Retail Report estimates annual IT spend by the Indian retail sector to be around USD $503.2 million. On average, it is estimated that the industry invests 0.75-1%of its sales in IT, though this could climb up to as a high as 2-3% when strategic ITinvestments are being rolled out. The global spend average is around 2% of sales.

These investments (in India), according to industry observers fall into two large groups:

y  Tier 1 retailers who typically play across multiple formats such as the Future Group,Reliance, Tatas and the Aditya Birla Group. These retailers have invested in best of 

 breed retail ERPs from suppliers such as SAP, Oracle and JDA.y  Tier 2 includes regional players such as Viveks, Vishal Megamart and branded food

retailers. Typically, these players tend to be more conservative and invest in localsystems or smaller solutions from global players (such as MS Dynamix, Retail Proetc)

y  Tier 3 will include single store players, some of who are making their first stepstowards incorporating IT in their stores.

For emerging India-based retail solution suppliers, Tiers 2 and 3 are particularly attractive.

As Kumar Vembu, Founder & CEO of GoFrugal Technologies points out, ³Single stores thatwe work with are growing faster than the organized chain ± same store growth that is. Theindustry best practice that is used by a chain is being observed and implemented by a smallretailer very quickly. Big organized retailers have been catalysts in bringing about change ± small retailers (now) focus on ambience, invest in better technology, customer service, etc tocompete. Overall, the entire retail landscape has changed in the urban sector whether organized or independent stores.´

The single store market is seen as a significant opportunity by retail technology vendors and players such as Dynamic Verticals which is now looking to launch a specialized solution for the single store segment. ³We have done considerable research in this area before bringingout this product,´ says Reshma Nagpal Director of International Marketing, DynamicVertical Solutions (DVS) which distributes and implements solutions built on the MSDynamics platform. (The product, LS Retail.net , was developed by the company¶s partner,

 but DVS has the rights to distribute as well as localize the product for India.)

Fast Growing Segments 

The fastest growing segments in the market are food retailers (across formats such assupermarkets, hypermarkets and specialty stores), apparel retailers, jewelry and thehospitality sector, says Nagpal. Technology retail is another growth area.

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technology-solutions-in-india/