Growing at a compounded annual growth rate (CAGR) of 15 per cent overall retail market in India including both organized and unorganized sectors is likely to reach a whopping Rs 47 lakh crore by 2016-17 from the level of Rs 23 lakh crore recorded in 2011-12, according to a joint study by apex industry body ASSOCHAM and Yes Bank.
“Organised retail, which constituted a meagre seven per cent of total retail in 2011-12 is estimated to grow at a CAGR of 24 percent and attain 10.2 percent share of total retail by 2016-17,” according to a study titled ‘FDI in Retail: Advantage Farmers’ jointly conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and Yes Bank.
“Rising incomes will be primary driver of this growth in the retail sector,” said Mr D.S. Rawat, Secretary General of ASSOCHAM while releasing the findings of the study.
“Favourable demographics, increasing urbanization, nuclearisation of families, rising affluence amid consumers, growing preference for branded products and higher aspirations are other factors which will drive retail consumption in India,” said Mr Rawat. “Both organized and unorganized retail are bound not only to coexist but also achieve rapid and sustained growth in the coming years.”
On the supply side, this growth will be supported by expansion plans of existing players and the entry of new players, noted the study.
However, the inefficiencies in current supply and presence of numerous intermediaries are difficult to curtail, it added. “Lack of basic infrastructure like roads, power, water and others is a major shortcoming that needs to be addressed in order to procure as well as supply on a pan India basis.”
“Dearth of skilled manpower, numerous clearances required to set up a retail outlet, lack of basic infrastructure like roads, power, water and others certain major bottlenecks hampering the growth of retail segment and required to be addressed effectively in order to procure and supply on a pan-India basis,” said Mr Rawat.
“Modernisation of traditional markets through public-private partnership (PPP), initiating uniform license regime applicable nationwide thereby doing away with numerous permits currently required for establishment of retail outlets, facilitating innovative banking solutions to ensure credit availability to unorganized retailers and farmers from financial institutions, stringent rules against collusion and predatory pricing and a code of conduct for organized retail sector for dealing with their suppliers,” added the ASSOCHAM secretary general while listing major policy recommendations to spur growth in India’s overall retail sector.
“The store-based retailing is likely to witness a CAGR of 7.6 per cent during 2011-16 and will grow by 44 per cent in absolute terms during this period,” further highlighted the ASSOCHAM-Yes Bank study. “Within store-based retailing, grocery retailers are forecasted to grow at a CAGR of 8.9 per cent during 2011-16 and non-grocery retailers will grow at six per cent in current sales value terms.”