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Indian retailing: Finding its feet - Views on News from Equitymaster
 
 
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  • Oct 16, 2000

    Indian retailing: Finding its feet

    In big cities and towns a quiet revolution is taking place in the mind of an average Indian consumer. With rising dual income nuclear families, economic prosperity is on the rise. But economic prosperity has its own pitfalls. This rising mass of professional population is hard pressed for time, and such there is growing urge to spend ‘quality’ time.

    The weekends have become very crucial for them to spend time with their families, to relax and enjoy and also finish the weekly shopping. As a result, the concept of super malls and retail chains is getting a push, where the consumer can buy everything at one stop, relax with their families and get value out of every rupee spent.

    The concept of super malls is not new to India. The Government run ‘Sahakari Bhandars’ and ‘Apna Bazaar’ have been part of the Indian consumption landscape for over four decades now, but the quality and variety available left much to be desired. Various business groups setting up shop to fill this gap. The last five years have seen a spurt in retail chains being opened in the 5 metros in India. But the fever is spreading to towns too.

    Among the well known stores that have entered are the Tata’s promoted Westend chain, Ajay Piramal promoted super mall Crossroads, RPG Group’s ‘Musicworld’ music stores and ‘Foodworld’ (formerly Spencer) supermarket stores, and Shopper’s Stop.

    But the Indian retail segment is still at a nascent stage. Total turnover is estimated to be around US$ 400 m, accounting for a miniscule 1% of the total world retail market. So there is a huge opportunity in this segment.

    The coming years are likely to see another round of entrants not only in the super malls and regular retail chains, but also in specialized products like music stores, greeting cards and gifts stores, food stores, eateries (pizza joints, McDonalds’) and apparels. This should be good news for the Indian shopping freaks. But this is the long-term scenario.

    In the short term, the oil price hike and the slow down in the India’s Index for Industrial production (IPP) are likely to adversely affect these companies turnover and margin growth.

     

     

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