You go to your cousin’s place in a metro city or an urban town and he tells you, “Let me take you to a nice place, it has newly opened and attracts amazing crowd”. What do you guess this place to be at the first thought? Of course, the new shopping mall – claiming itself to be the biggest in the locality or the city or the state and may be in the whole country!
The reason why I started with this incident is because it’s quite easy to believe it. The reason why you believe it is, it is possible to have a big new mall to open anywhere in an urban town now.
And what lies beneath this belief is the fact that we are cognizant of the retail revolution happening right here right now. We are aware that with every passing day, the retail industry is growing BUT what is imperative to mention here is, it’s not the surging retail industry which is the talk of the town now. It’s the organized retail industry which holds the matinee show timings. The world, the retailers, the consumers and not to forget, the real estate honchos, are not excited about the retail revolution as a whole, but the organized retail revolution.
Now, having seen how the retail revolution buzz has put up on our brains, lets unearth the real question behind this revolution to see where does it lead us to. The sector contributes 12 % of the GDP and is estimated to show 20% annual growth rate by the end of the decade as against the current growth rate of 8.5%. Total retail sales in India will grow from US$ 395.96 billion in 2011 to US$ 785.12 billion by 2015, according to the Business Monitor International (BMI) India Retail Report for the second-quarter of 2011. The Indian organized retail industry has a three-year compounded annual growth rate of 46.64 % and caters around 8% of the total employment. This data essentially means that there is a big market which is still waiting to be tapped in the organized retail sector. A CRISIL report says that the Indian retail market is the most fragmented in the world and that only 2% of the entire retailing business is in the organized sector. This suggests that the potential for growth is immense. There are about 300 new malls, 1500 supermarkets and 325 departmental stores currently being built in the cities across India. According to the Global Retail Development Index, India is positioned as the foremost destination for Retail investment and business development but 90% of the total retail chain outlets and shopping malls are only in the Tier-I and Tier-II cities. The organized retail real estate stock will grow from the existing 41 million sq ft to 95 million sq ft even when the current space is around 3sq ft per person as against 19 sq ft per person in US. It’s a bizarre combination of contrasts to such an extent that it can confuse us as to whether there is actually a revolution happening or it’s a made up! The truth is, whichever way you are thinking, you are right. It’s actually a blend of both.
The Indian retail industry is actually revolutionizing. Its revolutionizing because the consumption power of Indians is growing. Its revolutionizing because consumer awareness and the living standards are rising. Its revolutionizing because a big segment of consumer is youth between 20-35 of age who spends on the choices and choose the way he want to spend. But, at the same time, it’s still budding because the organized retail is still less than 10%, because the organized retail is still far away from the 300 million population of middle class, because the organized retail is still in Tier-I and Tier-II cities, because the organized retail is still far away from real India. And no industry can revolutionize unless it has touched the real India, the actual middle class which earn 90,000 to 2.4 lac INR per annum, who still relies upon the local Kirana stores, who still does not enter the AC malls and extra luminous shelves stores.
And till that middle class accepts the organized retail, this revolution is not a revolution in full throttle, it’s still budding. Retail in India is a revolution in making but not a revolution as yet!!
No comments:
Post a Comment