The economy of India has undergone a substantial transformation since independence and agriculture which was once the primary contributor to the Gross Domestic Product (GDP), now contributes only one-fifth. The country began implementing its liberalization policies in the 90’s and since then the economy has recorded a growth of 8 to 10 per cent annually from 1992 to 2010.
The key consumption trends show that the Indian market has added $930 billion to its economy and it is expected to double in the next few years. The Indian retail segment is poised to increase in size than the retail markets of many other companies like Italy, UK, or France. The share contributed by the sector is high and is about 58% compared to that of China where it is only 39% and the same consumption trend is expected to persist over the next decade.
The recent developments in the economy are already creating several ‘Hot Spots’ inside the country. Here are some of the emerging trends in the retail segment:
v The purchasing power of people is increasing and the power of consumption data helps in better understanding of customers and predictive modeling.
v When it comes to the garment space, mass customization remains the key area of opportunity.
v Parallel creation of products and services is one of the key differentiators.
v Aggressive marketing campaigns plays a major role in the buying decision of customers
v Brand identity is crucial and so is the uniqueness of the brand and fit.
v Role of e-commerce and technology is significant in the retail sector.
v The taste and buying decisions of youth
Even though, the retail sector is all set to reach new heights and seeing a new phase in trends, there are few challenges which still persist.
v 100% Foreign Direct Investment is allowed only in Cash and Carry retailing.
v Single brand retailing allows only 51% FDI
v FDI is restricted in Multi-brand retailing.
v Lack of good real estate and higher costs of real estates
v Infrastructure challenges
v Inadequate trained man power
India is currently in the list of one of the fastest growing economies and projections say that by the end of the year 2030, India will be one of the top five economies in the global level. The Indian retail market specifically contributes 35% of the share in GDP and is expected to grow at a rate of 7.5% by 2016.