just the facts - Retailing in India

just the facts – Retailing in India

French retailer Carrefour this week opened its first cash-and-carry store in India after months of speculation.

January 7, 2011

French retailer Carrefour this week opened its first cash-and-carry store in India after months of speculation. Here, just-food takes a look at retailing in India and the pitfalls many foreign retailers wanting to enter the country face with the help of Euromonitor’s Retailing – India report.

Despite the global economic recession and a consequent slowdown in the Indian economy, organised retail continued to make headway, although at a slower pace in 2009. Nonetheless, it has undeniably become a much larger environment.
Retail stalwarts such as Wal-Mart, Tesco and Marks & Spencer have already made inroads into the Indian retail industry and with multi-billion dollar investments by major domestic players such as Reliance Retail, the market is expected to go from strength to strength.
Pantaloon Retail India held the largest share of the market in 2009, although this is only 0.6% of the total market. The retailer also held the top spot in grocery retailing, with a 0.8% share.
The top grocery retailers behind Pantaloon in 2009 were Reliance Retail in second place, followed by Spencer’s Retail and then Aditya Birla Retail. Mother Dairy Fruit & Vegetable held fifth place followed by Subhiksha Trading Services.
Of the top retail chains, Pantaloon’s Big Bazaar came out on top with a 0.7% share of the market. The retailer’s Food Bazaar also featured in the top eight, with the sixth largest share. Other chains include Reliance Retail’s ‘Reliance’ chain, Spencer’s own-named chain and Aditya Birla’s ‘More’ stores.
With retailing in India attracting the attention of global players, the Indian Government has payed increasing attention to the country’s retail environment, and the impact opening up retailing would have on domestic players.
Despite increasing international pressure on India to deregulate its retail industry, lobbying by local political parties and retail associations has resulted in the prohibition of foreign direct investment in multi-brand retailing, other than for single-brand retailing, in which foreign direct investment (FDI) is allowed up to a maximum of 51%, subject to government approval.
Retail sales are predicted to grow from INR10.07bn (US$222m) in 2009 to INR12.98bn by 2014. More specifically, grocery retail sales are predicted to edge up from INR6.24bn in 2009 to INR7.31bn in 2014.
Hypermarket retailers were relatively unscathed by the economic crisis and in 2009 Pantaloon Retail opened 29 new Big Bazaar outlets. Overall, the number of hypermarkets increased from 210 in 2008 to 269 in 2009. Although the pace of expansion was slower than witnessed in 2008, it was still healthy at 28%.
The competitive landscape for supermarkets was starkly different in 2009, with Subhiksha having closed down all its stores. As a result Reliance Retail emerged as the largest player in 2009, with the maximum value sales and a network of 665 stores.