Sector Report Indian Retail Sector

Corporate Bridge Research, India Sector Overview: Retail

Ramprakash K Kram_prakash@yahoo.com 9/6/2011

Indian Retail Sector Ranking:

Indian Retail Sector is the fifth largest Global Retail Destination The Sector accounts for 22% of Indias GDP and contributes to 8% of total Employment The Industry is Dominated by Unorganized sector which account for more than 92% of total Retail Industry

Sector Overview:

Top five companies in Retail hold a combined Market Share of less than 2%

Sector Composition of Retail Markets

17

7 7 Jwellery

Beverages Textiles Sports Accessories 28 Food and Grocery Furniture and Fixtures Healthcare 32 5

(Figures represent percentage of each industry)

Organized retail share in Different Countries:

100 90 80 70 60 50 40 30 20 10 0 US Taiwan Malaysia Thailand Indonesia China India Organised Unorganised

Share of Organized and Unorganized sector in India:

3

200 180 160 140 120 100 80 60 40 20 0 2004 2005 2006 2007 2008 2009 2010 Unorganized Organized

Value in USD Billion

Future Scope: Industry Research: As per ASSOCHAM, the Organized Retail Industry in India is expected to grow at the rate of 50% annually to reach the value of 30% of the total retail market by 2013

The Size of Indian Retail sector is expected to touch US$1250 Billion by 2020from the Current US$425 Billion.

Demographic Advantage:

Percentage of population below 25 years of age in India is 53%, much higher than any other Emerging Economy.

With an assumed 9% GDP growth till 2020, an estimated 500 million Indians will form part of the Middle Class and this will propel Demand by 15 times.

Percentage of Population below 25 years of age in Different Countries:

Country India China Indonesia US Brazil Japan Germany

Percentage (%) 53 42 30 30 29 27 26

Key Players

Pantaloon Retail(India) Shoppers Stop Lifestyle Reliance Retail Aditya Birla Retail Trent etc

FDI in Retail

Up to 51% FDI is allowed in Single Brand Retail At Present India does not allow FDI in Multi Brand Retail. Many Policy makers are actively contemplating introducing 100% FDI in Multi Brand Retail in India in Future

Joint Ventures in Retail

A number of Multi National retail Enterprises like Wal-Mart, Tesco, Carrefour, Woolworth etc are actively seeking to enter the Indian Market.

Wal- mart is in talks with Bharati group for a tie up. Similarly, other retail giants are actively seeking Business Partners in India.

Conclusion

Retail Sector has immense potential in India. The growth in Organized Retail vis--vis the growth in Total Retail is in the proportion of 1:4 i.e. for every1% growth in the total Retail industry, the organized retail sector exhibits 4% growth. Hence, Organized Retail may encompass a substantial percentage of Total retail in India in Future and given the Economic Growth Rate and the Demographic Dividend, this sector is well poised to be the next sunrise sector on the Indian Economy.