The retail industry in India is one of the fastest-growing in the world and could see a compounded annual growth rate (CAGR) of 10 per cent over 2012-2020, growing from US$ 500 million to $1 trillion in that time frame, says a recent report released by PricewaterhouseCoopers International Limited (PwC).
In its report titled ‘Future of India – The Winning Leap’, PwC says India’s emerging-middle and middle class population, with household earnings between Rs 150,000 and 850,000 per annum, is currently around 640 million, and is poised to reach 900 million in 2021. This will lead the growth of retail sector in the country.
However, 92 per cent of India’s total retail market remains unorganised, dominated by local shops owned by independent private individuals, says the report. In such a scenario, promoting growth of organised retail will strengthen India’s consumption ecosystem—which includes producers, unorganised retailers, consumers, and the Government.
Growth in organised retail will create more jobs for people with lower skill levels, according to the report. Currently, the retail sector in India employs up to 40 million people, and if the sector is strengthened, it could produce 10 million additional jobs in the next ten years.
“We envision India boosting the share of organised retail from 8 per cent of total retail in 2012 to 30 per cent in 2024 and 50 per cent in 2034,” say authors of the report.
“The goal is to support the creation of a retail value chain that improves operational efficiency and that works with the unorganised sector to improve consumers’ overall retail experience—for instance, by offering more choices, more reliable supply of popular products, and lower costs. The end result would be an increase in overall consumption, among other advantages,” they add.
The report suggests that organised and unorganised retail players can partner to improve the overall retail ecosystem while also generating new benefits for their own customers. For instance, the unorganised sector could help extend organised retail’s reach to that “last mile,” where independent store owners understand the local market.
This model combines the prowess of organised retailing with the proficiency of neighbourhood stores, creating more value for consumers than either sector could provide on its own.
The report also suggests greater use of technology by retailers to reach customers. By leveraging digital retail channels (e-commerce), retailers could spend less on real estate while also reaching more customers in tier-2 and tier-3 cities. Some leading e-commerce players in India, such as Jabong and Myntra, derive nearly 50 per cent of their revenues from tier-2 cities.
Further, new technologies such as virtual walls and virtual mirrors will further help improve the retail customer experience, thereby encouraging greater consumption.
The authors’ project that digital retail could account for 50 per cent of the organised retail market in 2034, resulting in significant reductions in capital expenditure for retail space. (RKS)
Fibre2fashion News Desk - India