One-third of the world's large retailers suffered a decline in sales as the global economic downturn led to more cautious consumer spending and a drying-up of available credit.

Considering that successes in growing developed retail markets have become more challenging, large global retailers are increasingly being compelled to look at the emerging markets to pursue their growth ambitions.

However, as the 2011 Global Powers of Retailing report from Deloitte Touche Tohmatsu Ltd (DTTL) reveals, though pursuing growth in emerging markets will never be easy, many more retailers are now ready to take the plunge.

Though modern retailing in urban India accounts for roughly 15 per cent of retail sales and is likely to continue to rise in the coming five years to an estimated over 20 per cent, India as yet remains largely closed for global retailers since the current policy prohibits Foreign Direct Investment (FDI) in multi-brand retail (though up to 100 per cent FDI is permitted in the Cash and Carry sector/Wholesale trade and up to 51 per cent FDI is permitted in single brand retail.)

“While there are signs that the Indian retail sector may open up to FDI in multi-brand retail in the next few years, global retailers should be prepared to make significant investments for the long-term, particularly in upgrading the back-end infrastructure and supply chain and in helping to convince local suppliers and vendors that they are here to stay and build a following among consumers,” said Mr Rajan Divekar, Senior Director, Deloitte in India.

Austerity

The efforts of many global retail companies to cut costs and adjust their inventory levels have paid off, with net profit across the top 250 global retailers increasing from 2.4 per cent in 2008 to 3.1 per cent in fiscal year 2009 (encompasses June 2009 through June 2010).

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