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Posted: Saturday, December 19 2009. 15:28

Indian Retail suffers a year of Recession

India's retail industry boom gave way to despair in 2009 as consumers held back big spending, forcing some companies to restructure while recession-battered western retail chains would have felt glad they were not allowed to set shop, according to a report in Economic Times

Although the UPA government returned to power stronger, it decided to keep western multi-brand retail chains off from the country's  $ 450 -billion retail market. But the recession-battered global majors were busy securing existing operations elsewhere.

The tremours of recession were first evident when one of the earliest players, the budget-retail chain Subhiksha, went under. Not long after, north Indian chain Vishal Retail went for corporate debt restructuring. Others such as Mukesh Ambani-run Reliance Retail and Kishore Biyani- led Pantaloon went slow on expansion or even downsized operations, adds the report.

Though the last quarter saw a bit of marketplace confidence returning, overall, the year remained challenging. There were no estimates, however, of how mom & pop stores fared through the year.

Meanwhile, world's largest furniture maker IKEA scrapped plans to enter the country, citing government's restrictions on FDI. The Swedish retailer was planning to enter the single- brand retail segment, where 51 per cent FDI is allowed but it wanted further relaxation of the rules.

The last quarter, around the festive season, saw a bit of consumer confidence returning, with some retail player announcing expansion plans for the coming year.

The Franchise India 2009 Summit in November saw participation of over 200 Indian and foreign retail players, with many of them unveiling plans to invest big in India.

During the summit, Australia's largest retail chain, Retail Food Group, and Thailand-based restaurant-chain Minor Food Group announced plans for India foray by 2010.

Meanwhile, in wholesale cash-and-carry, where 100 per cent FDI is allowed, foreign players like Wal-Mart saw fruition of their much-awaited plans.

However, French supermarket chain Carrefour, which earlier planned to start its wholesale cash-and-carry business by mid-2009, postponed the foray till 2010. The company is yet to announce details of Indian operations.

       

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