Growth of the Retail Sector In India
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In this section we may deal with the growth of the organized as well as the unorganized retail sector of India.
Due to the untapped potential that exists in the Indian retailing market, it is a very fast growing sector. One reason that can be attributed to this rapid entry of the foreign retail giants ,is that the Western Countries have reached a point of saturation in their retail sector. Another reason as already mentioned earlier is the change in the tastes and preferences or the psychographic of the consumers that is bent in their favour.
Although the retail sector in India contributes to about 10% in the GDP, it is the most underdeveloped sector in terms of investments that are made in this sector. The unorganized retail sector has recorded a growth of 5% per annum while the organized sector is growing at 25-30 % per annum. One should not be impressed by the figures of the organised retail markets since developed market in US, Taiwan, Malaysia is still a dream to the Indian retail market. They have registered a growth of 50% per annum.
The retail stores have mushroomed in the Tier II and Tier III cities. The participants in the retail market hold the presence of market in the cities as a signal to their growth.
It has been seen that the retail companies have invested in the IT sector for their growth and development. The IT sector has contributed greatly to the growth of the retail sector in India. The retail firms have made lumpy investments in Enterprise Resource Planning System as a strategy for their growth and development. SAP has also assumed a significant role in the growth and development of the organised retail industry.
The sudden growth of the organised retail sector can be attributed to the ushering of the domestic retail giants like Reliance, Pantaloons, ITC, RPG, Rahejas and the Bharti Group. The foreign companies continue to wait in the sidelines. These prominent retail chains have adversely affected the farmers in some states. Another viewpoint is that the farmers have rather benefited since they were eager on the market intervention of the buig retailers for the purpose of marketing and processing of their output. Since the big retailers reap the benefits of buying directly from the farmers , the consumers can purchase the products at minimal price rates. In places like Uttarakhand, the big retail chains are welcomed for the same purpose by the farmers. They have helped in putting finances in the right channels of processing and packaging.
Growth of the Retail Outlets In India
Outlets
1996
1997
1998
1999
2000
2001
Food Retailers
2769
2943.9
3123.4
3300.2
3480
3682.9
Non-Food Retailers
5773.6
6040
6332.2
6666.3
7055.5
7482.1
Total Retailers
8542.6
8983.6
9455.6
9966.5
10534.4
11165
Source: P.G.Chengappa, Lalith Achoth, Arpita Mukherjee, B.M.Ramachandra Reddy andP.C.Ravi, Evolution of Food Retail Chains: The Indian Context, 5-6th Nov. 2003, www.ficci.com
From the above table it is quite evident that there is a rising trend in the total retail outlets in India. The non-food retail outlets contribute more to this rise.
The trend in the retail sector as compared to other sectors may be represented in the following graph. We can see that as compared to the clothing and the food and beverages industry the retailk industry has witnessed a sharp rise especially from 2002. before that it was following a slow and steady pace.
The growth of the different retail sectors can be discussed as under.
Growth of FMCG
The report produced by HSBC shows that the FMCG retail sector is expected to grow by 60 % by 2010. leaving aside the packaging sectors, the other sectors that have registered rapid growth are hair care, household care, confectionery, chocolates etc.
Growth of Consumer Durables
The consumer growth industry is estimated to grow by 40% in the coming season. The television, refrigerator and washing machines sector has also witnessed a rapid growth. The market for Indian colour television is expected to reach the value of 10.5 million units by the next fiscal year. The refrigerator market is estimated to reach 4.5 million.Hence in a nut shell the retail industry in India has witnessed unprecedented growth in the past years. The organised sector is expected to make Quantum jumps in the coming years in terms of its contribution to GDP.
