Organized Retail – Are they Welcome?

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The Indian Consumer – the end point in a sales process and the source of revenue for almost all businesses has opened his arms to the organized retail industry. But there are some road bumps to this segments path. Are they just myths?

In an economy driven in a big way by consumer spends the retail industry forms a major contributor to the country’s GDP. Currently the contribution is about 15% and is estimated at about $ 450 Bn – the fifth in the world. Off late, this industry has been marred with controversies in relation to the proposed FDI norms and increase in the number of super stores.  But, is it that a big deal if more organized retail comes into the country?

Let’s look at the current situation and the potential.

Myth

Truth

Organized Retail will kill the Unorganized retail markets sales

Both markets can co-exist and contribute to the economy. The combined markets said to grow to $1 Tn by 2015. Organized retail to grow to about 18% of the industry share.

Food and Groceries segment sales will be majorly affected by retail market.

Personal Care and jewellery segments witnessed highest growth rates; Food and grocery sales only 5% of total sales including the unorganized markets

Indians will prefer only kirana shops

Indians looking for more variety, better shopping experience, payment options- all under one roof

Organized retail presence will not be significant

about 50,000 stores including Hypermarkets, Super markets, Cash and Carry Stores etc. projected to be added  by 2012

We are not ready yet!

Organized retail already penetrated to more than 8% in metros and show healthy numbers in tier 2 cities

 

Well, the sentiments and the realities do not match and policy makers are very much open to having more organized retail formats to boost up the retail sales and the economy.  Along with the unorganized retailer sentiments, another threat will get unfolded – that of the e-retail industry. However, there is one clear winner emerging out of all this – the great Indian consumer.

 


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