Jewellery Outlook

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Indian Retail Continues To Evolve & Grow
Solitaire International, India

Despite the global slowdown, India’s retail landscape continues to undergo a complete transformation from being dominated by the unorganised retail sector, bazaars and wet markets to becoming ever more organised and modern. It also continues to show an astounding rate of growth according to a recently concluded study. Regan Luis reports.


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India’s rapid and relentless retail growth will continue well into the near future with spending on consumer goods and services expected to reach more than Rs.18.1 trillion ($391 billion) in 2010, up 36 per cent from Rs.13.3 trillion ($287 billion) last year, according to a new study released in Mumbai during the India Retail Forum in September.

This growth will be fuelled by a 15 per cent rise in annual income levels of the 300 million aspirational middle-class Indians over the next few years and a robust economy growing between 8- and 9 per cent, notes the 2009 edition of India Retail Report, produced by New Delhi-based research group Images F&R Research.

The study says that 70 million Indians already earn more than Rs.0.95 million ($20,300) a year, and that number will likely rise to 140 million by 2011.

(It must be noted here that in the wake of the global financial crisis, economy watchers say Indian GDP growth will slow to between 5- and 7 per cent in the near term.) Modern retail – which competes with India’s 12 million mom-and-pop stores, wet markets, bazaars and weekly or monthly rural fairs – accounted for nearly 6 per cent or Rs.783 billion ($17 billion) of the total Indian consumer spending pie and grew by more than 42 per cent in 2007.


In 2010, organised retailing is likely to have a 13 per cent share of the total spend at around Rs.2.3 trillion ($49 billion) owing to the growing popularity of modern store formats such as hypermarkets, supermarkets and department stores.

Organised retail is expected to maintain a faster growth rate over the next three years, especially in view of the fact that major global players and Indian corporate houses are seen entering the fray in a big way, the study observes.

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 “Modernising retail will see some 15 million people engaged in retail and retail support activities by 2010 – including front-end retail operations, supply chain management, logistics, process and infrastructure development and supplies,” the study says.

Jewellery represented 5.2 per cent of the overall Indian retail market in 2007. The Indian jewellery retail sector grew by nearly 10 per cent to reach Rs.694 billion ($14.9 billion) in 2007, placing it fourth among the top retail categories, down one spot compared with a year earlier.

 “In jewellery retail, the overall market growth was higher in 2007 at 9.6 per cent as compared to 9.2 per cent the previous year, but growth in organised retail was slightly at a lower pace in 2007 at 31 per cent as compared to the previous year,” the report says.

In 2007, food and grocery was the dominant retail category with a 59.5 per cent share, valued at Rs.7.92 trillion ($171 billion), followed by clothing and accessories with a 9.9 per cent share at Rs.1.31 trillion ($28.3 billion) and out-of-home food (catering) services with a 5.4 per cent market share at Rs.713 billion ($15.4 billion).

Consumer durables (Rs.575 billion, $12.2 billion) is the fifth largest retail category followed by health and pharmaceuticals (Rs.488 billion, $10.3 billion), entertainment (Rs.456 billion, $9.7 billion), furniture, furnishings & kitchenware (Rs.455 billion, $9.6 billion), mobiles and accessories (Rs.272 billion, $5.7 billion), leisure retail (Rs.164 billion, $3.48 billion), footwear (Rs.160 billion, $3.4 billion), health and beauty care services (Rs.46 billion, $978 million) and watches, clocks and eyewear (Rs.44 billion, $936 million) in that order.

 The organised retail segment offers a different picture altogether. Apparel and fashion accessories is the largest category with a 38.1 per cent share of the organised retail market, valued at Rs.298 billion ($6.3 billion), followed by food and grocery accounting for 11.5 per cent at Rs.90 billion ($1.9 billion), footwear with 9.9 per cent at Rs.77.5 billion ($1.6 billion) and consumer durables with a 9.1 per cent share worth Rs.71 billion ($1.5 billion).

Footwear and timepieces are the most organised of all retail categories, with nearly half of the money spent on these items going to the modern retail sector. They are followed by clothing and fashion accessories, where the modern retail sector controls 22.7 per cent of the market.

“The need of the hour is to sensitize all stakeholders to the transformation that modern retail can bring to our country. We need to develop a collaborative platform among retailers and other stakeholders that facilitates further growth of the sector. And as retailers, we need to focus on how to bring about market innovations that spur consumption,” said Kishore Biyani, chief executive officer of Future Group.

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