Retail Sector Income to Grow More Than 30% in 2009-10

Indian retail market, ranked as the most attractive emerging market for investment in the retail sector and the fifth largest retail destination globally, is likely to regain strength with income of major retail players expected to grow consistently to average more than
30 per cent by the end of current fiscal, according to an Assocham Financial Pulse Study.

The Assocham Financial Pulse (AFP) Study titled "Prospects in Indian Retail Sector" estimated that in the second quarter of FY 2009-10, income of the retail sector grew up by 7.2 per cent over the corresponding period of last year whereas according to last five years performance of the retail sector, the retail sector income would grow up by 22.7 per cent and 30.25 per cent in the third and fourth quarter of the financial year 2009-10. The Study noted that the share of retail trade in the country's gross domestic product (GDP) was between 8 to 10 per cent earlier. With strides of development in the organized retail segment, its share has risen to 12 per cent presently.

As per the Study findings, the overall size of Indian retail sector has been estimated to grow by USD 55 billion in 2010, at a compound annual growth rate (CAGR) of 5.5 per cent, to become USD 410 billion market by 2010. Also, organized retail, which currently accounts for nearly 5 per cent of the retail market, is pegged at around USD 9.23 billion and expected to grow at a CAGR of 2.3 per cent to touch USD 13 billion by 2010.

"India has one of the largest numbers of retail outlets in the world. The sector is witnessing exponential growth with retail developments taking place not only in major cities and metros but even in tier-II and tier-III cities in India" said Dr. Swati Piramal, President of Assocham. According to Assocham estimates, over 100 malls of over 30 million square feet of new shopping centre space are projected to open in India between 2009 and end-2010.

As the competition gets tougher with new companies entering the Indian retail landscape, existing players have also looked into their expansion activities seriously with plans of opening up new stores. In the next phase of retail revolution in India, the companies are going to woo the rural segment as the hinterland has witnessed an upsurge in economic development over the past few years hence maximum growth is expected to come from rural markets. During the last decade, the per capita income has grown up by 50 per cent in rural India, mainly on account of rise in agri-commodity prices and improved productivity, concluded the Assocham Study.

Originally published in The Stitch Times: March 2010