22,136 new outlets… Is it recession?

By Arif I Sheikh

Every now and then there are reports in media about the rate of growth in retail sector. For their own sake, a few organisations and reputed consultants spread negative sentiments about the retail industry. They are the guys who are extremely positive or extremely negative. Barely a year ago, they were painting very rosy picture of the retail market, now they are predicting no future for the industry.

However the following quotes and figures show a different story: As per confirmed media reports like IndiaRetailing, at least 22136 new outlets have been announced by different retailers. According to Retailers Association of India (RAI), the organised retail sector will grow by some 15 per cent in 2008-09. According to Technopak Advisors, modern retailing will grow by around 25 per cent this fiscal.

Commenting on the footfalls at the company outlets, Major Brands director Kamal Kotak said, “There has been no decrease in footfalls across our brands. All brands have performed well and as compared to last year’s figures, our sales figures this year have gone up by 15 – 20 per cent.” India’s leading flower retailer Ferns N Petals has claimed that it has seen the biggest growth this year. “With our outlets across the country and through the online service, we have seen 30 per cent growth in the retail sector and 80 per cent sales increase in the online service this year during the Valentine’s Day as compared to the corresponding sales in the last year. Apart from the growth which was seen during valentines, a growth of around 40 per cent is observed in the overall sale as compared to the last year,” said Pawan Gadia, VP, Ferns N Petals.

A report by global consultancy firm, AT Kearney said, "The consumer spending in India has increased by an impressive 75 per cent in the last four years and will quadruple in the next 20 years." Moreover, India recently topped the Nielsen Global Consumer Confidence study, conducted by Nielsen, a market research company. The biannual report revealed that Indians are "the most optimistic lot globally who think that their country will be out of the economic recession in the next twelve months."

Despite the global economic slowdown, Indian retailers are still optimistic about the India growth story. Speaking on the issue, Tarun Joshi, CEO and MD of Brandhouse Retails said "Fashion retail has not been impacted in a big way. Not even 0.5 per cent of the working population has been hit in India."

According to a joint study recently conducted by ASSOCHAM and KPMG, "The estimated annual growth of organised retail sector is 40 per cent. The size of organized retail sector by 2010 is estimated to reach USD 51 billion"

Where is recession in retail? There have been good sales (better than last year) on Diwali, Christmas and the extended period of discounts. Latest reports show increase in net sales in per cent over ' Q3 07. Koutons Retail 39.66 per cent, Pantaloons 24.37 per cent, Titan 27.63 per cent, Vishal 17.80 per cent, Shoppers Stop 7.28 per cent, Provogue 1.44 per cent, Zodiac 28.09 per cent, Liberty 0.49 per cent, Archies 11.08 per cent, Timex 4.30 per cent.

Doomsday Sayers are making all the mayhem about the growth in retail sector. Fresh management graduates, trainees and employees at junior and middle levels are paying dearly for this negativity. Even the students from top business schools are finding it difficult to get jobs.

Arif I Sheikh is COO, Retail, Ansal API Group. Views expressed are personal.