New Delhi: Online retail across the top seven cities will increase to Rs 839 bn in the next five years, taking the share of E-tail to 11 per cent by 2019, says a report.
At present, online retail across the top seven cities amounts to Rs 72 bn, with a modest share of 2 per cent in total retail spending, says ‘Think India. Think Retail’ report by Knight Frank and Retailers Association of India (RAI).
The report is based on a survey of more than 30,000 retail outlets across across 23 categories in cities of Mumbai, Delhi, Bengaluru, Chennai, Hyderabad, Pune and Kolkata.
'The findings of the report give encouraging signs of modernisation of retail in India. We at RAI hope that players from the entire retail value chain will find them useful in making informed decisions when it regards retail real estate or space – which has been and will remain the final frontier,' says Kumar Rajagopalan, CEO, Retailers Association of India.
Currently, the total retail spending in the top seven cities of India amounts to Rs 3,586 bn, with Mumbai accounting for the lion’s share, at 29 per cent This is followed by NCR and Bengaluru, at 25 per cent and 15 per cent respectively.
The modern retail penetration in the top seven cities of India stood at 19 per cent in 2014, of which brick and mortar modern retail was at 17 per cent and E-tail, at 2 per cent.
NCR has the highest penetration of brick and mortar modern retail, at 23 per cent, followed by 21 per cent in Bengaluru. Mumbai has only a 12 per cent penetration of brick and mortar modern retail.
Around 90 per cent of the retail market in Hyderabad is serviced by non-modern retail, compared to less than 75 per cent in NCR.
Currently, NCR has the highest penetration of E-tail in India, at 3 per cent The corresponding number for Mumbai and Hyderabad is 1 per cent each.
'With an ever expanding domestic market and a forecast growth rate of 15% a year, the Indian retailing scene seems extremely attractive for stakeholders and investors alike. The e-commerce industry is booming like never before and this coupled with high disposable incomes have led to a spurt in the internet culture that aims to change the dynamics of the Brick & Mortar modern retail segment,' Shishir Baijal, Chairman & Managing Director, Knight Frank India said.
The total retail spending in the top seven cities of India is projected to more than double, from Rs 3,586 bn in 2014 to Rs 50 bn in 2019. The share of modern retail is estimated to increase from 19 per cent to 24 per cent during that period, the report said.
While the share of E-tail is expected to jump by more than five times, from 2 per cent in 2014 to 11 per cent in 2019, the share of brick and mortar modern retail is expected to fall from 17 per cent to 13 per cent during the same period.
'The retail shop formats in India have changed over the years, from non-modern mom& pop stores to modern structures in shopping streets and malls. While modern retail is expected to grow its share from the current 19% to 24% over the next 5 years, E-tailing as a component of modern retail is likely to see a substantial jump in its share and has the potential to challenge the prospects of brick & mortar modern retail outlets,' Samantak Das, Chief Economist & Director of Research, Knight Frank India said.
'Even though e-commerce will excel in the country, retailers will always require additional footprint to increase business turnovers. Despite the spurt in online retailing, there still exists a significant number of reputed retailers who believe in the latent strengths of the brick & mortar retailing methods and going forward, will continue to invest in this segment. With reference to our understanding of the current market, there is an additional requirement of 4.3 mn sq ft of retail space per annum across the top seven cities, however there is no reason why this number can’t be breached in the years to come,' Aditya Sachdeva, Director – Retail, Knight Frank India said.