According to a report released by Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian retail is in transition and expected to balloon from present 4 percent to over 20 percent by 2010 as it expands from from existing $328 billion to $430 billion.
FICCI has suggested measures for the retail sector like granting industry status, allowing FDI, simplification of the tax structure, improving skills of retail personnel, a determined move towards a single common market and a check on counterfeit to guarantee a continued and reasonable growth of the sector.
According to the report, organized retail may grow at a CAGR of 50 percent and touch $90 billion by 2010. It has witnessed a CAGR of 35 percent over the past five years and currently accounts for 1.5 percent of the country's GDP.
The organized retail is expected to receive an investment of around $30 billion in the next five to seven years, of which 92 percent is likely to be used in urban areas for the hypermarket (38 percent) and supermarket (28 percent) formats.
Meanwhile, at in another seminar, Suhel Seth, a marketing expert worried about lack of retail expertise. Talking at the National Marketing Summit organised by American Management Association, he touched the past saying that till the early 90s, Indian retail was a mismatch of supply and demand. "Suppliers demanded whatever price they wanted. Some of that arrogance is still present today," Seth reflected
There are much less formal consumer redressal systems across all product categories, particularly FMCGs. "In the US, a person can confidently go and return the jeans he purchased a fortnight ago, solely on the basis of not having a fancy for it anymore," he revealed. Needless to say, there's nothing of that sort in India.
While supplier arrogance was still a problem, Seth highlighted the challenge of pricing. "We don't have the template to create a price-value equation," he said. "The challenge is to create pricing elasticity for Indian consumers who are very price sensitive."
A third problem, according to Seth, is the lack of a training orientation of people who head and manage retail in India . One has to constantly reinvent not only retail products, but also retail experiences. "Retail therapy should become a reality," Seth said.
In addition, retailers are facing the problem of positioning, something which our counterparts abroad seemed to have gotten a hold of. "In the US ," Seth said, returning to his favourite example, "two retail chains on the same street can stand for two different things. For that matter, this applies to even two restaurants in the same luxury hotel."
This brought him to the next issue: the volume-value equation. According to Seth, a retailer needs to realise whether he wants to be volume driven (in which case footfalls matter), or value driven (by selling only premium products).
Globally, the size of the retail industry stands at US $ 8 trillion. In India , organised retail is less than three per cent of the overall retail pie, according to a study by Technopak. |