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India’s retail sector is projected to grow to $1.3 trillion by 2020 from the level of $672 billion in 2017, said Anuj Kejriwal, Managing Director & CEO, Anarock Retail.
“The India’s retail sector is on a faster roll than ever before and the boosters acting on retail sector are rapid urbanisation and digitisation, rising disposable incomes and lifestyle changes, particularly that of the middle-class,” he explained.
Consumption growth
Over the last two decades, the Indian retail market witnessed phenomenal changes, evolving rapidly from traditional shops to large multi-format stores in malls offering a global experience, and on to the highly tech-driven e-commerce model. According to Kejriwal, these changes have resulted in unprecedented growth in overall consumption with numbers suggesting that consumer expenditure in India is expected to almost double to $3,600 billion by 2020 from $1,824 billion in 2017.
Another highlight of this growth story is that organised retail is gaining ground. Growing significantly at a CAGR of 20-25 per cent annually, organised retail penetration is expected to be over 10 per cent of the total Indian retail market by 2020 as against just 7 per cent currently.
The organised retail market is estimated to increase to 19 per cent across the top seven cities during the same period from the current 9 per cent.
High demand for a superior customer ‘experience,’ penetration of big brands into smaller towns and cities, enhancement in business strategies and operations, along with the movement from unorganised to organised business have been key factors driving this growth.
Policy boosts
Furthermore, liberalisation in FDI policies by the Centre has repositioned the Indian retail sector on the global map, attracting a large number of global retailers into the Indian diaspora and further fuelling growth of organised retail in the country.
The government’s decision to allow 51 per cent FDI in multi-brand retail and 100 per cent FDI in single-brand retail under the automatic route is the icing on the cake which has attracted giants like Walmart to make a foray into India. By easing the FDI norms in the retail sector over the past few years, the government has hit the bull’s eye.
The introduction of the Goods and Service Tax (GST) as a single unified tax system in July 2017 was another major policy overhaul that is attracting foreign players. The government’s move to provide a single-policy framework for retail, FMCG and e-commerce in order to offer a level playing field to stakeholders is another step in the right direction.
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