Why India is not-so-good retail destination? Blame it on inflation, policy

India drops six spots to 20th place, its lowest-ever ranking in the GRDI, says a recent report.
Why India is not-so-good retail destination? Blame it on inflation, policy

New Delhi: India drops six spots to 20th place, its lowest-ever ranking in the GRDI, says a recent report.

Retail is still hindered by high consumer price inflation, currency fluctuations, high current account deficits, government debts, and strict foreign direct investment policies that have long been an impediment to growth, an AT Kearney report said.

India's e-commerce market is expected to grow more than 50 percent in the next five years, it further addaed.

Cash-on-delivery options have been an important step to growth. Inventory management, logistics planning, and resource availability are important hurdles for online retail in India.

Economic growth has lagged the rates of the past decade's boom times, but at 4.7 percent last year, it was an improvement from 2012.

Full Report: The 2014 Global Retail Development Index 

However, India is still an appealing long-term retail destination for several reasons following reasons.

1. Demographics

A population of 1.2 billion people, half of whom are younger than 30 and roughly one-third of whom live in cities.

2. High Disposal Incomes

Indians' disposable incomes are increasing, allowing them to spend more and try new products, brands, and categories while spending a lower proportion on food.

3. BJP in power

The ruling Bharatiya Janata Party has clearly indicated a pro-business policies. Many experts feel positive about India's long-term GDP outlook and industry growth.

Migration from traditional stores to modern retail continues, but modern formats account for only 8 percent of the total market, the report said.

On the ohter hand, the report highlighted some serious concren for the Indian retail market. Real estate market with high prices and low availability, high borrowing costs, personnel shortages, expensive supply chains, and unpredictable politics both locally and regionally, are the few concrens emphasised by the reprt.

Retailers are now focusing on improving operations and back-end processes to increase profitability. Lean models—in terms of size, capital spending, and operating costs—are gaining hold.

In recent times, retailers have started reducing store sizes and opening new stores in selected locations to maximise returns.

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