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Indian retail industry likely to grow at five per cent annually

28-February-2005
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Indian retail industry likely to grow at five per cent annually

The retail industry in India is expected to grow at five per cent per annum and the organised retailing is on its way to become a Rs 35,000-crore market by 2005, according to a report released at the KSA Retail Summit in the Capital on Friday.

'The India Retail Report 2005: An Images- KSA Technopak' was released by Kishore Biyani, Managing Director, Pantaloon Retail. According to the report, the opportunities for organised retail sector in India are manifold. "The size of the organised retailing market stood at Rs. 28,000 crore in 2004, thereby, making up a mere three per cent of the total retailing market. Moving forward, organised retailing is projected to grow at 25 per cent -30 per cent per annum and is estimated to reach Rs 100,000 crore by 2010. Further, its contribution to total retailing sales is likely to rise to nine per cent by the end of the decade," said Arvind Singhal, Chairman, KSA Technopak.

Briefing on the report R S Roy, Editorial Director, Images Group, said that the presentation of the report required a yearlong interaction with over 1000 companies representing the entire gamut of manufacturing, retailing and the services sector that had direct or indirect impact on consumer spending.

The report said that favourable demographic and psychographic changes relating to India's consumer class, international exposure, availability of increasing retail space, wider availability of products and brand communication are some of the factors that are driving retail in India. Corporate groups like Tata, Reliance, ITC, Bombay Dyeing and foreign investors and private equity players are also looking for investment opportunities in the sector. Stocks in the sector are also becoming increasingly attractive and introduction of contemporary retail formats like supermarkets and hypermarkets present huge prospects for growth.

According to Amitabh Taneja, Chief, Images and Director, International Council of Shopping Centres and Indian Retail School, "India is now ready to leapfrog into the next stage of evolution where a large number of Indian and international retailers would build scalable models with a pan-India appeal with a view to be sustainable in the long term."

According to the report, mall development is fast picking up in small towns thereby creating quality space for retailers to fulfil their aggressive expansion plans. 85 per cent of the retail boom, which was so far concentrated in the metros, is beginning to percolate down to smaller cities and towns. Development of India as a sourcing hub shall further make India as an attractive retail opportunity for the global retailers

Food and grocery top the list so far as consumer spending in the Indian context is concerned. Apparel, jewellery and accessories, consumer durables, catering services and home improvement are some of the categories where retail expansion opportunities are likely to increase. Niche categories like books, music and gifts offer increasing opportunities for retail players, the report said.

Images-KSA projected that over 550 million people will comprise the kids and teens retailing segment by 2015. Wholesale trading and rural retailing will act as catalysts for growth, the report stated which in turn will increase the size of the total market. Commenting on Rural Retailing, Adi B. Godrej, Chairman, the Godrej Group, said, "FDI could indeed do a lot in this sector as entry of international retailers would bring in the required expertise to set the supply chain in place which would result in elimination of wastage, better prices and quality for consumers and higher income for farmers besides of course farm produce retailing getting a facelift."

The report also tried to showcase the roadblocks that hamper the growth of otherwise upbeat scenario, some of them being regulatory barriers, fragmented suppliers, lack of skilled personnel, differential taxation system, labour legislation and lack of 'industry' status.

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