THE GLOBAL RETAIL INDUSTRY

Retail has played a major role world over in increasing productivity across a wide range
of consumer goods and services .The impact can be best seen in countries like U.S.A.,
U.K., Mexico, Thailand and more recently China. Economies of countries like
Singapore, Malaysia, Hong Kong, Sri Lanka and Dubai are also heavily assisted by the
retail sector.

Retail is the second-largest industry in the United States both in number of establishments
and number of employees. It is also one of the largest worldwide. The retail industry
employs more than 22 million Americans and generates more than $3 trillion in retail
sale annually. Retailing is a U.S. $7 trillion sector.

Wal-Mart is the world’s largest retailer. Already the world’s largest employer with
over 1million associates, Wal-Mart displaced oil giant Exxon Mobil as the world’s
largest company when it posted $219 billion in sales for fiscal 2001. Wal-Mart
has become the most successful retail brand in the world due its ability to leverage size,
market clout, and efficiency to create market dominance. Wal-Mart heads Fortune
magazine list of top 500 companies in the world. Forbes Annual List of Billionaires has
the largest number (45/497) from the retail business.

The Indian retail industry is one of the fastest growing in the world. Retail industry in
India is expected to grow to US$ 1,100 trillion by 2020. India is the fifth largest preferred
retail destination globally. The country is among the highest in the world in terms of per
capita retail store availability. India's retail sector is experiencing exponential growth,
with retail development taking place not just in major cities and metros, but also in Tier-
II and Tier-III cities. Healthy economic growth, changing demographic profile, increasing
disposable incomes, urbanization, changing consumer tastes and preferences are the other
factors driving growth in the organized retail market in India.
COMPETITIVE LANDSCAPE IN INDIAN
RETAIL SECTOR
Current Retail Scenario of India:
In last one and half decades, many corporate giants have entered into retailing and have
successfully professionalized this business. Many international retailers have entered
Indian market and many are about to enter to explore retailing opportunities.

Interestingly, apart from a unique industry, retailing has been emerging as a discipline, a
branch of study. In almost all B-Schools, many students specialize on retiling field every
year. Even, primary and secondary schools have introduced retailing related topics in their
curricula in one or other form. Now, retailing activities have transformed into promising
business worldwide. Retail business occupies an important place in the world economy.
Retailing industry, accordingly to Global Industry Classification Standard (GICS), is
growing at the rate of 5%. In year 2009, total turnover of retail industry in the world is
estimated to be $12,104 billion. It is one of the major sources of employment, too. It
enjoys 6% to 7% share in total employment in India and China.

As the corporates – the Piramals, the Tata’s, the Rahejas, ITC, S.Kumar’s, RPG
Enterprises, and mega retailers- Crosswords, Shopper’s Stop, and Pantaloons race to
revolutionize the retailing sector, retail as an industry in India is coming alive.

Retail sales in India amounted to about Rs.7400 billion in 2002, expanded at an average
annual rate of 7% during 1999-2002. With the upturn in economic growth during 2003,
retail sales are also expected to expand at a higher pace of nearly 10%. Across the country,
retail sales in real terms are predicted to rise more rapidly than consumer expenditure
during 2003-08. The forecast growth in real retail sales during 2003- 2008 is 8.3% per
year, compared with 7.1% for consumer expenditure. Modernization of the Indian retail
sector will be reflected in rapid growth in sales of supermarkets, departmental stores and
hyper-markets. Sales from these large-format stores are to expand at growth rates ranging
from 24% to 49% per year during 2003-2008, according to a latest report by Euro monitor
International, a leading provider of global consumer-market intelligence.In a developing
country like India, a large chunk of consumer expenditure is on basic necessities,
especially food-related items. Hence, it is not surprising that food, beverages and tobacco
accounted for as much as 71% of retail sales in 2002. The share of food- related
items had, however, declined over the review period, down from 73% in 1999. This is not
unexpected, because with income growth, Indians, like consumers elsewhere, have started
spending more on non-food items compared with food products. Sales through
supermarkets and department stores are small compared with overall retail
sales. Nevertheless, their sales have grown much more rapidly, at almost a triple rate
(about 30% per year during the review period). This high acceleration in sales through
modern retail formats is expected to continue during the next few years, with the rapid
growth in numbers of such outlets due to consumer demand and business potential.

Factors responsible for the development of the retail

sector in India:

 Rising incomes and improvements in infrastructure are enlarging consumer

markets and accelerating the convergence of consumer tastes.

 Liberalization of the Indian economy which has led to the opening up of the market
for consumer goods has helped the MNC brands like Kellogg’s, Unilever, Nestle,
etc. to make significant inroads into the vast consumer market by offering a wide
range of choices to the Indian consumers.

 Shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.

 The internet revolution is making the Indian consumer more accessible to the
growing influences of domestic and foreign retail chains. Reach of satellite T.V.
channels is helping in creating awareness about global products for local markets.
 About 47% of India’s population is under the age of 20; and this will increase to
55% by 2015. This young population, which is technology-savvy, watch more than
50 TV satellite channels, and display the highest propensity to spend, will
immensely contribute to the growth of the retail sector in the country. As India
continues to get strongly integrated with the world economy riding the waves of
globalization, the retail sector is bound to take big leaps in the years to come.

Indian retailing system exhibits considerable variety. We find giant shopping malls and a
small retail shops operating simultaneously in nearby area. Interestingly, some small sole
proprietary retailers are competing successfully with retail corporate giants in
neighbouring areas.

Medium and large departmental stores also operate in retailing field amidst many small
retailers and a few corporate retailers. In the same way, service sector retailing business
is also booming. Most service sectors, including banking, stock markets and securities,
insurance, healthcare, communication, tour and travels, hotel and restaurants, and so forth,
have started concentrating their attention on effective retailing to survive and grow.

The Indian retail sector can be broadly classified into:

a) FOOD RETAILERS

There are large number and variety of retailers in the food-retailing

sector. Traditional types of retailers, who operate small single-outlet businesses
mainly using family labor, dominate this sector .In comparison, super markets
account for a small proportion of food sales in India. However the growth rate of
super market sales has being significant in recent years because greater
numbers of higher- income Indians prefer to shop at super markets due to higher
standards of hygiene and attractive ambience.
b) HEALTH & BEAUTY PRODUCTS

With growth in income levels, Indians have started spending more on health
and beauty products .Here also small, single-outlet retailers dominate the
market. However in recent years, a few retail chains specializing in these
products have come into the market. Although these retail chains account for
only a small share of the total market , their business is expected to grow
significantly in the future due to the growing quality consciousness of buyers for
these products .

c) CLOTHING & FOOTWEAR

Numerous clothing and footwear shops in shopping centers and markets operate
all over India. Traditional outlets stock a limited range of cheap and popular
items; in contrast, modern clothing and footwear stores have modern products and
attractive displays to lure customers. However, with rapid urbanization, and
changing patterns of consumer tastes and preferences, it is unlikely that the
traditional outlets will survive the test of time.

d) HOME FURNITURE & HOUSEHOLD GOODS

Small retailers again dominate this sector. Despite the large size of this market,
very few large and modern retailers have established specialized stores for
these products. However there is considerable potential for the entry or
expansion of specialized retail chains in the country.
 e) DURABLE GOODS

The Indian durable goods sector has seen the entry of a large number of foreign
companies during the post liberalization period. A greater variety of consumer
electronic items and household appliances became available to the Indian
customer. Intense competition among companies to sell their brands provided a
strong impetus to the growth for retailers doing business in this sector.

f) LEISURE & PERSONAL GOODS

Increasing household incomes due to better economic opportunities have

encouraged consumer expenditure on leisure and personal goods in the
country. There are specialized retailers for each category of products (books,
music products, etc.) in this sector. Another prominent feature of this sector is
popularity of franchising agreements between established manufacturers and
retailers.

SECTOR’S HIGH GROWTH POTENTIAL IS

ATTRACTING INVESTORS
 India has occupied a remarkable position in global retail rankings; the country has
high market potential, low economic risk and moderate political risk
 India is expected to become the world's third-largest consumer economy, reaching
US$ 400 billion in consumption by 2025, according to a study by Boston
Consulting Group.
 In FDI Confidence Index, India ranks 11th (after U.S., Canada, Germany, United
Kingdom, China, Japan, France, Australia, Switzerland and Italy)
 India is ranked first in the Global Retail Development Index 2017, backed by rising
middle class and rapidly growing consumer spending.
 Overall, given its high growth potential, India compares favorably with global
peers among foreign investors
 India’s retail market witnessed investments worth US$800 million by Private
Equity (PE) firms and wealth funds in 2017.
 India’s retail sector attracted Rs 9.5 billion (US$ 147.40 million) investments in
FY18, at a growth rate of 35 per cent year-on year from Rs 7 billion (US$ 104.34
million) in FY17.
 Department of Industrial Policy and Promotion (DIPP) approved three foreign
direct investments (FDI), Mountain Trail Food, Kohler India Corporation, and
Merlin Entertainments India in the single brand retail sector.
RISING PROMINENCE OF ONLINE RETAIL

 Online retail business is the next generation format which has high potential for
growth in the near future. After conquering physical stores, retailers are now
foraying into the domain of e-retailing.
 With growth in the e-commerce industry, online retail is estimated to reach US$
60 billion by 2020. It is forecasted to grow at a CAGR of over 30 per cent from
2016 to 2021, on the back of shift from traditional retail to online channels by
millennials.
 The government plans to allow 100 per cent FDI in e-commerce, under the
arrangement that the products sold must be manufactured in India to gain from the
liberalized regime.
 In 2017, online retail industry of the country reached US$ 18 billion.
 The key drivers of online retail are a young population aided by easier access to
credit and payment options, increasing internet penetration and speed, 24-hour
accessibility and convenient and secured transactions.
 Online retailers continue promotional prices in the market, offering a significant
boost to e-retailing in consumer durable sector.
 Options like cash-on-delivery and manufacturers’ warranty add fuel to this rage.
Cash-on-delivery is the most preferred payment option with over 30 per cent of
buyers opting for it in India.
 India's ecommerce industry's sales rose 40 per cent year-on-year to reach Rs 9,000
crore (US$ 1.5 billion) during the five-day sale period ending September 24, 2018,
backed by huge deals and discounts offered by the major ecommerce companies.