Will online retail win over traditional retail?

All you need to know about Indian Retail!

Indian retail is an incredible assortment of formats. On one hand we have the local stores offering credit and home delivery, all to maintain personal relationships with customers, on the other this is well complemented by the organised big-box retail chains. And then there is a flourishing e-commerce sector that wishes to outdo both and transform the industry. From personalised services to cash-on-delivery and even installment payment systems, India’s retail sector has definitely come of age.

Also this report gives you access to:

  • Total retail spending and penetration of modern retail in 2014
  • Projected total retail spending and penetration of modern retail in 2019
  • Incremental requirement for brick and mortar modern retail space
  • Split of occupied modern retail space into malls and shopping streets
  • Product category split of occupied modern retail space in Bengaluru, Hyderabad, Chennai, Kolkata, Mumbai & Pune.
  • Brand-wise split of occupied modern retail store space in malls
  • Retail landscape of top 7 cities in India.

THINK INDIA. THINK RETAIL 2015

By Shishir Baijal, Chairman & Managing Director
Knight Frank India

Indian retail is an incredible assortment of formats. On one hand we have the local stores offering credit and home delivery, all to maintain personal relationships with customers, on the other this is well complemented by the organised big-box retail chains. And then there is a flourishing e-commerce sector that wishes to outdo both and transform the industry. From personalised services to cash-on-delivery and even installment payment systems, India’s retail sector has definitely come of age.

Over the last decade, the concept of shopping has also undergone a sea change in terms of format and consumer buying behavior, ushering in a revolution across the country. Modern retailing has taken over the Indian retail market as is observed in the form of bustling shopping centres, multi-storied malls and the huge complexes that offer shopping, entertainment and food under one roof. As per our report on the retail sector – ‘Think India Think Retail’, modern retail penetration in the top seven cities of India stood at 19 per cent in 2014, of which brick and mortar modern retail spaces was at 17 per cent, and E-tail at 2 per cent. However, the scenario will soon change as the share of E-tail is expected to upsurge five times its current size, from 2 per cent in 2014 to 11 per cent in 2019.

The Indian customer has evolved with time and this has led to a sudden spurt in global brands entering the market with their set of offerings. This coupled with a rise in purchasing power has brought branded merchandise across categories like apparels, cosmetics, beverages, food and even jewellery within the reach of the potential customers. Currently, the total retail spending in the top seven cities of India amounts to INR 3,586 bn (US$ 59.8 bn), with Mumbai accounting for the lion’s share of 29 per cent. This is followed by NCR and Bengaluru at 25 per cent and 15 per cent respectively. Going forward, the total retail spending across the top seven cities is expected to more than double, over the next five years.

Given the current spurt in e-commerce activities across the country, we expect the retail sector to see substantial changes in the coming months. While the share of E-tail is expected to upsurge five times by 2019, the share of brick and mortar modern retail will see a drop from 17 per cent to 13 per cent during the same period. And it is time retailers take note of the change and capitalise on this opportunity by introducing newer formats that would pave way for better products that are available at the right price.

With an ever expanding domestic market and a forecast growth rate of 15 per cent a year, the Indian retailing scene seems extremely attractive for overseas investors who are looking to foray into this segment and make huge returns on the back of a large consumer base that exceeds 600 bn customers. Today, several global names are keen to enter the Indian retail market; however, it is for the present government to decide the route. Will FDI be the best one? We will have to wait and watch.






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