The Indian retail market is the second largest retail destination globally. Favorable demographics, rising disposable consumer incomes, real estate developments and changing lifestyles have given rise to prosperous consumers, who are more than eager to adopt the latest trends in vogue. Hence, India is witnessing an unprecedented consumption boom. The Indian retail sector is highly unorganised. The share of organised retail in India is estimated to be around 5.9%. According to ASSOCHAM, retail majors have unveiled plans to invest Rs1, 520 billion for expanding network of stores in the next 4-5 years. The penetration of organised retail is increasing rapidly and more number of players are making their footprints in this industry in the anticipation of a growth opportunity. The organised retailers are planning to spread all over the country, and the major players of the global retail are also coming to reap the benefit of the Indian Retail sector. Different developments in the industry signify the ongoing retail revolution. Trent Ltd has announced to invest Rs20000 million for increasing its number of hypermarket stores named Star India Bazaar, currently company is having 4 Star Bazaar and now it is going increase it to 100 in the next 5 years and Rs127 billion for establishing grocery stores. Real estate developers have plans to invest Rs65 billion for building mega malls. One of the main concerns is that in the rush to expand, the organised retailer is lacking the strategic vision resulting in increasing gap between claims and the ground reality. Most of the retail companies would primarily depend on the cost-cutting measures adopted by them. Growth prospects are likely to face challenges due to restrictions on FDI, lack of a uniform tax structure across states, rising electricity charges, newly-imposed service tax on rentals, attrition levels of employee and increasing pressure on infrastructure in key consumer markets. The coming years are likely to witness several acquisitions, joint ventures, expansion and capital rising for fund expansion plans. According to industry estimates, the overall size of the retail sector in India is expected to touch US$390.68 billion by 2010. The Indian retail sector is at an inflexion point, with many enabling conditions coming into existence e.g. growing economy, favourable demographics, rising disposable consumer incomes, real estate developments and changing lifestyles. Prosperous consumers are more than eager to adopt the latest fashion trends. All these changes are driving the growth of organized retailing. The Indian retail market is the second largest retail destination globally. According to industry estimates, the Indian retail market is estimated to grow from US$330 billion in 2007 to US$390.68 billion by 2010 and US$637 billion by 2015. Organised retail, which accounts for 5.9% of the total market at present, is likely to increase to 37% by 2010.
Retail and real estate boom will further roll down in 2008 as these two key sectors are well poised to notch a year-on-year growth of 30-35% and between 40-45% respectively over the calendar year 2007, according to projections made by the Associated Chambers of Commerce and Industry of India. Organised and unorganised retail size in calendar 2007 has been estimated at US$300 billion which is likely to grow up to US$365 billion in calendar 2008 and further reach the size of US$440 billion by 2010. According to the Union Commerce and Industry Ministry, now foreign direct investment (FDI) has allowed in the retail sector, that is 100% in the form of Cash and Carry business and 50 % in the form of Single Brand business. The retail sector is growing at a swift pace, fuelled by a strong economy, favourable demographics, rising disposable income level and rapidly changing lifestyles and consumer aspirations. This growth is aided by all development, fuelled by the government bodies’ initiative of releasing real estate space for retail development in prime areas. The Indian retail sector is expected to reach a size of US$24 billion by 2010. Growth prospects are likely to be improved due to the government allowance to FDI in this sector – 100% in Cash & Carry and 51% in the single brand – so the growth potential of the Indian Retail industry is likely to be improved. But the lack of a uniform tax structure across states, rising electricity charges, newly-imposed service tax on rentals, increasing attrition of employees, increasing pressure on infrastructure in key consumer markets and the not getting of the industry status is hindering the growth of the sector. According to ASSOCHAM, in 2007-08 fiscal, total retails contribution to national GDP is estimated between 8 to 10% which would further jump up to nearly 12% in next few years. By 2010, retails share to national GDP in totality is likely to be 21%. About 94% of capital investment being made in the sector is in tier I cities of Mumbai, Delhi and Bangalore. The reality sector is likely to notch US$90 billion by 2015.