Indian Retail Market: On the Way to GloryManish Verma
There are many factors that have led to the growth of retail sector in India. Some of the primary reasons are advent of internet which can be better termed as digitization, rising purchasing power of consumers, urbanization and rapidly changing lifestyle of the consumers. Many retail consultants in India have approved of these reasons.
There has been sharp rise and improvement in the consumption pattern of Indians which has made the retail sector grow and the sector is expected to record a growth of $1.3 trillion by 2020. If this pattern continues then there is going to be a shift in consumer expenditure to $3,600 billion by 2020 from $1,824 billion in 2017.
There is a positive tendency seen in the section of organized retail. The organized retail penetration is expected to reach 10 percent of the retail market which at present is about 7 percent. Consequently, the organized retail market is also going to grow and reach the level of 19 percent which is currently at the level of 9 percent, according to reports published by many retail consultants in India. This was mainly said, initially, by Anuj Kejriwal who is Managing Director & CEO, Anarock Retail.
Generally observed, there has been a great penetration of the big brands in small cities and people of India are able to enjoy the foreign brands that previously were not within their reach. This can be directly linked to the betterment of purchasing power of consumers.
Superior customers experience has noted intensity and the public are going for goods that a decade ago was not really in their lifestyle. There are many foreign brands that have established themselves firmly in the Indian market. They continue to flourish as the consumers are buying their products. This is a positive sign in terms of retail industry.
Foreign Direct Investment is another reason why there is an increasing consumerism. With the liberalization of FDI, more and more companies are able to invest. With this we can also see a positive change in the lifestyle of consumers. Changing taste and preferences of consumers will bring India, at par with the consumption pattern of the developed nations.
The government of India has taken the decision of allowing a 51% of FDI in multi brand retail and total of 100% FDI in a single brand. Such changes in policy have attracted many international giants to look for a favorable chance of prosperity in Indian retail market. Easing of FDI has made India enjoy the consumption pattern that is being followed globally.
Goods and Services Tax (GST) is another major step that has been taken in terms of retailing. This has given a boost to the foreign brands and they are highly interested in investing in the Indian market. When there is a single framework applicable to a large variety of investment procedure then the foreign brands are more interested in making a penetration in the retail market. Same is the present scenario in Indian retail industry.
From unorganized retail there has been a shift to the organized retail that has done the trick of streamlining the process. When the procedure is long and tedious then the foreign brands refrain from investing. With this we can say that the Indian retail industry is marching steadily towards glory.
There are many "markets" that offer opportunities in the Indian retail space. Therefore, while online mass retailers will look to create an offline presence, online "digital first" niche brands, backed by specialised manufacturing businesses, also hold value.