With the Indian retail industry undergoing a major paradigm shift, the mood over the retail industry is upbeat. Organised retailing has grown many folds in the last couple of years and it is zooming ahead with a steady growth rate of 30%. Thanks to the entry of global giants. The Indian retail industry currently pegged at annual revenues of over US$300 billion is expected to cross $400 billion mark by 2010.
Huge investment is likely to be pumped into a host of retail-related activities such as cold chains, retail supply logistics, warehousing, sourcing and merchandising management are likely to grow immensely in the next few years.
Notwithstanding some stumbling blocks, the immense potential of the retail boom is likely to accelerate the growth of many other sectors as well. Let us examine some of the industries that are on the growth path
The change over of the entire ambience in the retail sphere has put India on the radar of global retailers as well as suppliers. With the opening up of India’s retail sector on a huge scale the domestic logistics companies expand are gearing up to offer a wide spectrum of services and many key players have started investing significantly are leveraging on strengthening their network and supply chain distribution solutions. Many global retailers are not merely looking at India as a potential investment base they are also keen on making India as a sourcing hub.
The logistics companies which hitherto provided services from transportation to warehousing have to expand their sphere activities to include new value-added services such as packaging, labelling and reverse logistics. With the Government of India attaching top priority to this sector and focusing more on improving the infrastructurethe logistics and warehousing sector is all set to expand further.
Buoyed by the tremendous growth in the retail industry, the real estate is also riding on high wave with as many as 300 shopping malls expected to come up in the country within the next five years. The international shopping experiences have increased the need for the availability of retail real estate space on the lines of the mall concepts of the west.
The need for the space for attractive super markets and hyper markets are driving the industry to frenzy.. Further the global players are keen on setting up their own wholly owned or wholly managed sourcing and buying offices, which makes the real estate industry flourish. As the availability of quality retail space will be a key determinant for the growth , the retail giants are likely to occupy millions of square feet of retail space. To ensure their space these retail giants are teaming up with builders of repute such as DLF, Emaar, Rahejas and the Ansals. It is a over all win- win solutions .it
With the Non resident Indians are also keen on opening up the retail sector in India commercial property in India are already on the upswing and create a very positive air to the business environment in the country.
India’s s position as a technology supporter is well established all over the world. IT is still flourishing with BPOs and KPOs contributing significantly besides software. The retail boom is likely to bring in substantial growth to the IT products. The overall developments in the retail industry is definitely a source of huge income for the consumer business. The entry of global giants is likely to change the behaviour and the buying
pattern of the consumers and fuel the growth of consumer goods. With a significant level of increase in education IT products have gained acceptance in educational institutes as well as in households.
On the software side all the major players have realised the need for the importance of stock management. Many of them have already invested heavily on good supply chain management and inventory management softwares. By investing on IT easy access to the latest stock positions and the movements of various other goods collections can be monitored.
Retail companies back home can pull out a leaf from the success stories of Indian IT and BPO companies. The market trends ensure that these companies can not be far behind in leveraging the Indian outsourcing industry’s cost advantage. Besides, as the industry has evolved over the years, the experience and the expertise of the Indian retail industry can be outsourced to the tilt by global retailers. Even some of the retail companies who are already acting as an outsourcing agent for some of the global players who outsource their IT functions to them can expand their service beyond IT and the time is ripe for many retail companies to embrace BPOs.
Many global players are keen on outsourcing services such as customer relationship management, human resources, facilities management and accounting functions which . offers a huge cost saving potential. Though retail sourcing has been there for a while, retail outsourcing will gain further momentum.
Manufacturing sector is another industry that is bound to reap rich benefits due to the impact of the retail industry boom. A number of manufacturers in India are falling in line with the western trends by setting set up dedicated units to service the retail channel.
Though lucrative opportunities exist across product categories, many international retailers are eyeing on the huge the young Indian population considering their affluent life style and ever increasing spending power. As the consumer spending is high on food, apparel and jewellery and fashion accessories these three sectors have opened up with great vigour as never before. Also books, music and gift items offer excellent opportunities for the retail players to cash in on the boom.
The liberalisation and deregulation initiatives taken by the Indian government are aimed at supporting growth and integration with the global economy. Recognising the potential influence of the retail boom on the over all economic development and taking in to account of the global participation in the retail sector the Indian government has adopted a liberalised policy of FDI in retail sector . The government is actively promoting FDI, investments from NRIs (Non-Resident Indians) including Overseas Corporate Bodies (OCB’s) owned by the NRIs. The reforms have reduced licensing requirements and allowed foreign participation which ahs ultimately made the process of investment a lot easier. Further with the retail industry appreciating on an average rate of 25-30% per year, which is bound to generate millions of jobs in the coming years.
The Retailers Association of India (RAI) has already made a series of representations to the Government through white papers and appeals addressing various issues concering the retail industry in order to sustain the boom.
- M D Sridharan