The 2009 edition of India Retail Report, listed among the top selling non-fiction books in the last year, is scheduled to be released tomorrow in a large gathering comprising hundreds of domestic retail majors, international observers, analysts, retail support specialists and industry experts at the India Retail Forum 2008 at The Renaissance, Mumbai.
The mammoth report says that given the rapid pace of retail growth, it is expected that Indian retail market (estimated at current prices) will be in excess of around Rs 18,10,000 crore by year 2010; and organised retail will likely exceed to around Rs 2,30,000 crore, accounting for nearly 13 per cent of the total market in 2010.
On the eve of its release, Kamal Nath, Union Minister for Commerce & Industry, said: “The India Retail Report 2009 is a well researched and professionally presented document that brings forth several opportunities that could benefit the Indian consumers. I look forward to the Indian retail sector continuing on to its developmental growth path and spreading its benefit to all.”
Amitabh Taneja, group head, IMAGES, and chief convenor, IRF, said: “Retail thrives where people go on holidays, at work places, travel hubs and in sports centres. Apart from opening retail stores at these destinations, there are many opportunities for mutual benefit.”
“The report has contributions from over 100 thought leaders from the retail industry and we are grateful to each one of them for their enlightening contribution,” said RS Roy, editorial director, India Retail Report 2009, and convenor, IRF.
According to Kishore Biyani, chief executive officer, Future Group, said: “The need of the hour is to sensitize all stakeholders to the transformation that modern retail can bring to our country. We need to develop a collaborative platform among retailers and other stakeholders that facilitates further growth of the sector. And as retailers, we need to focus on how to bring about market innovations that spur consumption.”
Glimpses from India Retail Report
As per the Images F&R Research estimates for India Retail Report the Indian Retail market stood at Rs 1,330,000 crore in 2007 with annual growth of about 10.8 per cent. Of this, the share of organised Retail in 2007 was estimated to be only 5.9 per cent, which was Rs 78,300 crore. But this modern retail segment grew at the rate of 42.4 per cent in 2007, and is expected to maintain a faster growth rate over the next three years, especially in view of the fact that major global players and Indian corporate houses are seen entering the fray in a big way. Even at the going rate, organised retail is expected to touch Rs 2,30,000 crore (at constant prices) by 2010, constituting roughly 13 per cent of the total retail market.
The consumer spending is ultimately pushing the economy into a growth-and-liberalisation mode. The Indian market is becoming bolder by the day, with the economy now expected to maintain its growth at over 8 to 9 per cent and average salaries being hiked by about 15 per cent, there will be lot more consumption.
In the overall retail pie food and grocery was the dominant category with 59.5 per cent share, valued at Rs 792,000 crore, followed by clothing and accessories with a 9.9 per cent share at Rs 131,300 crore. Interestingly, out-of-home food (catering) services (Rs 71,300 crore) has overtaken jewellery (Rs 69,400 crore) to become the third largest retail category, with a 5.4 per cent market share – this largely reflects the massive employment opportunities to youngsters in the services sector and accompanying changes in consumer lifestyles.
Consumer durables (Rs 57,500 crore) is the fifth largest retail category followed by health and pharmaceuticals (Rs 48,800 crore), entertainment (Rs 45,600 crore), furniture, furnishings & kitchenware (Rs 45,500 crore), mobiles and accessories (Rs 27,200 crore), leisure retail (Rs 16,400 crore), footwear (Rs16,000 crore), health and beauty care services (Rs 4,600 crore) and timewear and eyewear (Rs 4,400 crore) in the order.
In the organised retail segment, the picture is different altogether. Apparel and fashion accessories is the largest category with 38.1 per cent of the market share, valued at Rs 29,800 crore, followed by food and grocery accounting for 11.5 per cent of the organised retail market at Rs 9,000 crore , footwear with 9.9 per cent of the organised retail market share at Rs 7,750 crore, consumer durables with 9.1 per cent market share at the fourth place (Rs 7,100 crore), and out-of-home food (catering) services and furniture, furnishings & Kitchenware retail in the order.
Timewear (48.9%) and footwear (48.4%) are the most organised of all retail categories. Apparel and fashion accessories retail comes next with the organised segment controlling 22.7 per cent of the market.
The mobile & accessories retail market has shown fastest growth in 2007 (25.6%) over the previous year, the other two prominent categories being out-of-home food (catering) services where growth was 25.1 per cent and books, music & gifts leisure category which achieved 23.3 per cent growth.
In the organised retail segment, however, the fastest growth was recorded in the tiny heath & beauty care services category (Rs 660 crore), which grew at the rate of 65 per cent in 2007 over the previous year – again a reflection of rise in services sector employment that demands proper grooming. The second fastest growing organised retail category is that of entertainment (53.8%), followed by the mobile phones & accessories and the food & grocery retail categories, both of which achieved 55.2 per cent growth in 2007.
Much of the stupendous growth opportunity in catering services (25.1%) and leisure retail (23.3%) categories was utilised by the unorganised retailers because organised players could not keep up to the desired growth momentum. A closer study of the retail growth story at constant prices shows that in both these categories growth of organised retail was higher in 2006 (41.7% and 26.1% respectively) as compared to 2007 (37% and 25%).
At constant prices, growth in the fashion & accessories retail category, both in the overall market and the organised retail segment, have been consistently positive since 2004: while the overall market grew 12.8 per cent in 2007, the organised segment grew 35.5 per cent.
In jewellery retail, the overall market growth was higher in 2007 (9.6%) as compared to the previous year (9.2%) but growth in organised retail was slightly at a lower pace in 2007 (31%) as compared to the previous year.
The overall market growth in the timewear category has declined from 10.7 per cent in 2005 to 9.7 per cent in 2006 and further down to 8.9 per cent in 2007. However, growth in organised retail was higher in 2007 (16.6%) as compared to 2006 (14.8%). Popularity of mobile phones is to a large extent responsible for the dampening of the overall market growth in this category while the renewed enthusiasm in the organised segment is on account of the fillip from luxury brands and offerings that are positioned more as a hi-end lifestyle statement than on the functionality aspect of the product
Footwear retail, the overall market as well as its organised segment, has grown faster year after year but growth in 2007 was especially remarkable: the overall market grew 12 per cent in 2007 as against a 9.2 per cent growth in 2006 while the organised segment grew 42.3 per cent and 36.4 per cent respectively for the two years. The global brands have actually turned the heat on, and the domestic brands too appear to have accepted the challenge in the true spirit.
Growth in the health and beauty care category has been remarkable in 2007, though the organised segment growth in 2007 (57.5%) was slightly lower as compared to 2006 (59.1%). The demand is stupendous but organised players have hardly much to boast of in terms of innovative concepts and global standards when it comes to providing the customers with an experience that is superior and radically different from what the unorganised segment offers. This category needs to be positioned as a “wellness” category that provides individualised services to customers with synergies of health & beauty care, pharmaceuticals and specialised clinical services – all at one place.
Another category that merits special mention is furnishings and furniture retail, where the overall market grew at seven per cent in 2007 as compared to just 3.2 per cent in 2006 – thanks to the housing sector boom. The organised segment also grew faster at 29.7 per cent in 2007 as compared to 23.1 per cent in the previous year, but this Rs 45,500 crore category calls for better attention from organised players.
Consumer durables and the mobile phone & accessories categories have both grown faster in 2007 as compared to 2006. At constant prices, the overall food & grocery retail market grew slightly higher at 2.3 per cent in 2007 as compared to a 2.2 per cent annual growth in the previous two years. But the organised retail segment in this category is simmering in the true sense – a 50 per cent growth in 2007 as compared to 42.9 per cent in 2006, and lot more fireworks can be expected this year and the years ahead. Valued at Rs 9,000 crore, this organised market constitutes barely 1.1 per cent of the total food & grocery retail market.