Despite the shooting pain of recession, current economy has proved favorable to the retail sector of India, making the country to top the Retail Index at a global level. Among 30 emerging countries in the retail index, India ranks first, followed by China at the fifth position. Investors give first priority to this ranking, and global retail strategies are developed on the basis of the growing economies of the countries.

Retail Industry Structure:

Indian retail market is regarded as one among the ten largest markets and is estimated to be around $350 billion. Foreign retailers control 51% of the market. In this segment the top five retailers comprise less than 2% of the market. During the previous year, India was at the second position. The share of the retail business in the countrys GDP is rated to be in-between 8-10% in 2007. It has grown in a healthy ratio of 12% currently, and is positively asserted by economic analysts to go up to 22% by 2010. Retail sector in India is expected to grow and reach $833 billion USD by 2013 and to $1.3 trillion USD by 2013 exhibiting a CAGR (Compound Annual Growth Rate) of 10%. More than four million retail outlets are located all over India, with one million outlets in the urban areas.

Growth Drivers:

A recent research report states that India will be one of the most attractive destinations for retailers from all across the globe. It also states that organized retailing will grow to retail $50 billion USD by 2011. The total number of malls is predicted by the report to grow more than 18.9% by 2015. Apparels, food, and grocery will dominate the organized market segment in India. (Source: RNCOS, Booming Retail Sector in India).

Changing consumer behavior, and lifestyle, and the influence of western culture among Indians, have resulted in a phenomenal growth of the retail sector of the country. The majority of population being youngsters with an average age of 25, there is a sharp increase in the consumer-spending trend. The graph of consumer spending grew at an impressive rate of 75% during the past four years. Low inflation and higher disposable income in the II and III tier cities have pushed the country up in the global radar.

Apparel Retailing:

Apparel is the second largest in the Indian retail category, and is predicted to grow by 12-15% every year. Along with food and grocery, apparel is expected to dominate in the organized retail category. In a global perspective, India has the largest number of retail outlets. By 2010, retail malls are expected to grow two-fold, and by 2015, major retail developments will be seen in a drastic pace in all II and III tier cities in the country.

International retail giants are seeking entry into the country. Marks & Spencer is planning to open 35 more stores in the period of five years. Future Group has reorganized its policies regarding FDI planning to bring in more foreign investment. Currently FDI is permitted only in single brand retail outlets, and not on multi brand outlets. Mahindra Retail, a part of the Mahindra Group is planning to invest $19.8 million USD by 2010 in its specialty retail store Mom and Me. Carrefour, one of the largest retailers of Europe is proposing to start wholesale operations in India by 2010. Currently they export goods from India to UAE, Thailand, Malaysia, and Singapore. Plans are chalked out by the company to start its first cash-and-carry outlet in the National capital Region.

India is now on the radar of global retailers. Accelerated development of the retail industry in the country and building brand value of domestic products is essential not only for marketing the consumer products more efficiently, but also for the development of the retail industry.


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