Exclusive Overview of Indian Retail in 2017, what to expect in 2018



India, with the shared category of 55 percent, was top sourcing destination in 2016-17. For all the retail giants from across the world, the untapped major chunk of themiddle class is an attracting force that drives them to India. Recently, there have been many emerging possibilities for the retail sector. With new businessmen entering the industry, theretail sector is expected to grow rapidly in coming years.
The Indian retail sector is already witnessing growth at an accelerated rate. This growth is the outcome of retail development, not only in major metros and cities but also in Tier-II and Tier-III cities. As most of India’s population is young and working, the purchasing power of Indian consumers is growing.

Growth in Retail Sector
·         India will gain from the latest FDI policy in retail.
·         Indian retail is attracting investors from across the globe.
·         The confidence of investors in India’s retail economy has grown. This has been proved when India ranked 8th in FDI Confidence Index.
·         Increase in income, availability of credit and change in lifestyle major contributors in Indian retail industry.
India’s retail industry is, undoubtingly, one of the fastest growing retail industry in the world. Accounting for 10 percent of the country’s GDP, it is hovering over all industries not only in its contribution to GDP but also in employment. This high growth potential is attracting investors from all around the world.
The availability of credit has enhanced the purchasing power of the consumers. This increase in purchasing power has supported the sale of higher value items and also encouraged repeated purchases. The consumer mindset in buying has shown a clear shift with many of them making well-informed buying decisions. Consumers are more ready to experiment and are willing to buy those products that they have never used before.
The expansion in the purchasing power of middle class has led to an increase in the purchases of luxury products and also facilitated brand consciousness. While the increase in discretionary income and change in lifestyle have been significant growth drivers of Indian retail sector, GST has helped in simplifying the tax structure. Thus, leading to better cash flows, supply chain structure, profitability,and pricing.
Future Possibilities
·         The rural market has immense growth potential and needs to tapped
·         Private label is experiencing increased level of activity and has tremendous opportunity
·         Large retail players are attracted towards the price competitiveness of Indian retail market
·         International retailers are increasing sourcing from India
If tapped with theright set of products and pricing, there are high growth possibilities in arural marketin India. In recent years, there has been an increased investment in infrastructure. This has helped in building connectivity which has extended the reach of retailers to therural market.
The organised Indian retail sector has begun to experience an increased level of activity in private label space. The share of private label in just 6 percent in comparison to 19 percent in theUS and 39 percent in theUK. Therefore, there are many opportunities for homegrown labels. Many international retailers are increasing sourcing and moving from third party purchasing office to having their own offices that are wholly owned and managed by them. 

Key Initiatives
Ø  100% FDI under government approval route for trading for food products manufactured and/or produced in India
Ø  Minimum investment cap is USD 100 million
Ø  The government reserves the right to procure a certain amount of food grains to ensure the Public Distribution System (PDS) and Food Security System (FSS). This will enhance consumer security.
Key Points
1.      The online retail industry is growing at an accelerated rate of 12 percent with the revenue reaching USD 14.5 billion.
2.      The estimated organised retail penetration share would reach 13 percent in 2019.
3.      The unorganised retail penetration will hold amajor share of 87 percent in 2019.
4.      FMCG market expected to reach USD 103.7 billion by 2020.

Challenges of Retail Industry
The diversity in the state policies and local influences has become a hindrance for the retail to expand in all aspects. The non-availability of skilled labour, discounts from online retailers and the high cost of real estate are some of the challenges in the rural market.
Indian retail industry is on a growing track. And in comparison to other industries, it is recording the fastest growth. India’s growth into a developed country depends on the growth of its retail just like most of the developed countries today. India is a dynamic place that is being targeted by many international brands to capitalise the growing consumption pattern. With better government policies coming into play, the future of Indian retail looks promising in 2018.


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