Sunday, July 18, 2010

Destination India!!!!


Retailer, refers to "cutting off, clip and divide" in terms of tailoring. The French brought the concept of organised retailing in form of Bon Marche in Paris and did it in a fashionable way. The Britishers adapted it throughout their empire and the Americans modified it, made it efficient and played with the economies of scales. But now it is Destination India, the largest democracy in the world, is all set to welcome the world of organised retailing. But in order to succeed, retailing would have to undergo a major metamorphosis in order to adapt to the Indian market condition. India is the hot favourite destination for all the leading retail chains across the globe. With Indian economy on an upsurge, and the disposable income of the population on an increase, with the expanding middle class, they shall have the taste, if they enter the market with the correct strategy and strategic partner.

The organised retail consists of only 6% of the $20 billion retail market in India and is growing at a rate of 20% per annually, has all the potential to cash on, and thus, excellent incentive for the cash rich foreign retailers to enter the Indian Market. The likes of Walmart, Tesco, Carrefour, Starbucks, Arstana, GAP & other international giants are already in or set to enter the Indian terrain. But there are few political and social barriers for these companies to enter the Indian market. The Indian govt’s FDI policy allows only 51 % foreign direct investment in single brand outlets, and the multi-brand outlets being restricted to only cash and carry formats. Also the current 12 million small Kirana shops in the unorganised Indian retail sector employ more than 33 million people. With the growth of the organised retail sector, these kirana shops face a slow but sure death, hence affecting the millions employed. The Indian goverment cannot ignore these facts, and hence have to put the brakes on the FDI. These policies compile the foreign retailers to join a strategic partnership with an Indian firm, thus clipping their wings and taking away the full operational freedom.

Courtesy-

Aditya Desai
FT Batch 2009-2011

2 comments:

kaka said...

nice compilation of facts...

Parth said...

Bhai the Indian retail market size is $350 billion not $20 billion, i think you meant the orgainsed retail is $20 billion, approx 6% of $350 billion market

Parth