Evalution model of new retail formats in India

Abstract

The growing economy of India has given good boost to the disposable income of the individual. Economy has seen the 13% growth annually in 2012-13. The greater per capita is incurred on the retailing. The retail industry grew at about a rate of 13% in the last fiscal year. The biggest change in the industry is that the Indian Government approved 51% of the FDI in the multi brand retailing and 100% in single brand retailing in the last quarter of 2012. This provided an opportunity for existing retail giants and emerging players in the industry to enter India and to capture the market. The popular names in the industry who want to enter India are COSTCO, Wal-Mart, IKEA, PRADA etc. Also the 95% of the Indian retail sector is unorganized sector which proves to have high potential for organized retail business in India. Now India is considered as one of the most desirable retail destinations in the world. The minimal penetration of organized retailers in retail and change in the consumption pattern of Indian population has made it as next boom industry. With the introduction of foreign direct investment only from 2012, the review year did not see a change of market leaders. Domestic (Indian) players continued the trend of dominating the entire market. Seventy per cent of the leading retailers in the country were local. These players are still accounting for a small percentage of the market as more than 90% of entire retailing was conquered by small independent retailers. New Reforms in multi-brand and single brand retailing allow Indian shoppers to experience retailing unlike the standard Indian retailing in big outlets and try brands which were earlier accessible only if one visits western countries. Consumers, especially those belonging to wealthier class, were quite excited about the decision. However, the less affluent consumer base was not happy as the small kirana stores, which are considered cheaper and have a more personal relationship with their clientele, will lose ground to the new hypermarkets and supermarkets entering the country.(Ref: Euromonitor). Market Share of Top 5 Retail Players is expected to be around 3-7% by 2012 and 5-12% by 2017. And Retail market consolidation will also be dependent on several external parameters like FDI regulations, political environment etc. The following figures illustrate the organized penetration in comparison with consolidation and GDP/per capita of several countries.