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Factors estimated to propel the growth of the organized retailing
Increased Purchasing Power
The National Council of Applied Economic Research classifies households into five categorieslower, lower middle, middle, upper middle and high. The movement of households within these income categories reflects the changing dynamics of the Indian market. 33% of Indian households are in the middle- to high-income category in 2004. This is projected to increase to 49% by 2010. The impact of increasing income levels is reflected in the sales trend for high involvement products like cars and multi-utility vehicles (MUVs) in the Indian market. The Society of Indian Automobile Manufacturers registered growth in commercial vehicle segment a rate of 10%. While the M&HCV segment has grown by 4.5%, the LCVs grew by more than 19% during 2005-06 as compared to 2004-05.
Changing Consumption Patterns
The rapid pace of organized retailing is fueled by changing consumer habits in both cities and large town by (DINKS) Double income no kids group and increased aspirations caused by exposure to the satellite television, cable and other channels. The growth for the changing habit patterns would be affected by the mobile telephones (new product categories like ring tones estimated at INR 400 crore) and increasing credit-card usage (estimated to reach 21mn the end of 2006).
Young Indian Consumers
The Indian consumer segment is the youngest in the world with a median age of 24 as compared to other developed nations. With fertility rates at an estimated three children per woman and a population growth rate at 1.6% pa, the population is expected to continue to grow to 2050. There should also be a big surge in the 20-34 age groupup from 210m (25%of the total population) in 1991 to an estimated 312m (27% of the total population) by 2010. This increase in population would lead to acceleration of demand of personal care products and personalized financial services.
More Available Retail Space
The boom in the retail sector is also associated with the rise of mall all across the country. There are 220 mall project in the pipeline till 2007, 139 in the big 8 cities including the metros and 81 in other Tier II cities. Developers are keeping in mind the astonishing pace with which the new supply is expected to enter the market and are developing specialty malls and other propositions to offer a different experience to the changing consumer.
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