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Is This The Right Time To Do Funding In Retail Business?

By 2020 Indias retail trade is expected to increase by 60% and it’ll catch up US $1.1 trillion.

Tags: retail, investment, Mountain Trail Food, Kohler India Corporation, Merlin Entertainments , DIPP

BY Madhushree Chowdhary  |  May 04, 2018  |  comments ( 0 )  | 
Is This The Right Time To Do Funding In Retail Business?

The Indian retail industry has been proven to be one of the most dynamic and fast-growing industries across the global trade market. It offers 8% of the employment and 10% of the country’s GDP (Gross Domestic Product). Now, India holds the 5th rank in the list of largest global destination for the retail market. India’s massive middle-class population, fast urbanization and effective growth of internet have given this country a huge potentiality.

Market Size:

By 2020, India’s retail trade is expected to increase by 60% and it’ll catch up the US $1.1 trillion. The overall retail trade can increase by 12%, traditional trade by 10% and modern trade by 20% yearly. Indian retail market has two parts – “Organized Retail Market” of $60 billion that is 9% of the total sector, and, “Unorganized Retail Market” valuing 91% of the sector.

By 2017, the online retail has increased by 23% to $17.8 billion. By 2020, India’s B2B e-commerce can reach US $700 billion. India’s total B2C can reach US $26 billion. Among these, $3 billion is expected to be reached within upcoming 3 years through 16 product categories, as stated by the FICCI and IIFT. By this time, the size of Indian modern retail will also be doubled up to US $25.7 billion from US $13 billion.

Vigorous investment in the sector and effective growth in the number of internet users are making India world’s fastest growing e-commerce market. Several companies are hopeful and looking forward to witnessing this change. There’s expectation that Indian e-commerce sales will reach US $120 billion by 2020, increasing from US $30 billion as on FY2016. With the support of 530 million shoppers by 2025, Indian e-commerce market is hoping to reach US $220 billion in terms of GMV. Increasing usages of web-based services, growing speed on reliable internet networks and improved, a suitable variety of products will support this revolution.

By 2021, supported by an encouraging environment with reforms and regulations, Indian direct selling industry can reach US $2.5 billion.

Within 2013-2016, Indian export of local lifestyle goods and retails has grown by 10% at a CAGR. By 2025, India is hopeful to become world’s 3rd largest country in the consumer economy, with consumption of US $400 billion.

Indian Luxury Market can reach US $30 billion by 2018, growing from US $23.8 billion as on 2017, supported by youngsters’ brand preferences and the income-rising of tier-2, tier-3 peoples, as per Assocham.

Investment Scenario:

The growing demands and needs in Indian retail market have inspired several companies to invest here over few months.

•    Three FDIs, namely Mountain Trail Food, Kohler India Corporation and Merlin Entertainments India are approved by the DIPP in the single brand retail sector, along with two FDI proposals of more than 400 crores in the retail sector.

•    Inspired by 2017’s success, herbal-ayurvedic brands, new Indian organic labels in cosmetics, food, hair and skin care etc. are spreading their market to build up an increased herbal segment.

•    By 2017, 7 new brands have joined Indian market. Investments in Indian retail sector by private equity firms have reached US $200 million too.

Government Initiatives:

Some important initiatives by Indian Government for the improvement of Indian retail sector are –

•    The government has eased the FDI rules in food processing that permits e-commerce companies and foreign retailers to sell “Made in India” products easily.

•    The government has permitted 100% FDI in online good retailing and automatic route services. It provides clarity to the businesses of e-commerce companies in India.

Road Ahead:

Customers prefer increasing choices of products in low budgets. E-commerce helps in this matter and so growing rapidly in India. This trend will grow more with upcoming years. By influencing the e-commerce, retailers will be able to spend less money on real estate as well as will be able to reach more customers in tier-2 and tier-3 cities.

Betterment of the whole retail industry can be ensured if both organized and unorganized retail companies work together, creating new benefits for the customers.

So undoubtedly, the future of Indian retail industry is very positive, with the support of rising earnings, convenient demographics and the inclusion of foreign allies and growth of urbanization. If anybody wants to invest in Indian retail sector, it is the right time to do so.

 

 





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