India poised to be 3rd biggest retail market

Hyderabad: Given the high demographic dividend and high growth rate of GDP, India is poised to become the world's third largest consumer market by 2025, according to the Malls of India 2019 report. The country is fifth largest retail market now.

"With a population of over 133 crore, the Indian market provides a very customer base.

Over the past few years, India emerged as preferred investment hub due to positive policy changes that in turn contributed towards an investor-friendly business environment and have built sturdy market fundamentals," said the 9th Edition of Malls of India 2019 report published by Relx India Ltd recently.

Pointing out that retail market is one of the key tangible barometers to track health of the economy of a region and country, Bimal Sharma, Head-Retail (India), CBRE South Asia Private Limited, in his write-up in the report, said: "Consumer spending which typically accounts for around two-thirds of GDP, has been a key indicator of the health of the retail market.

Growing urbanisation, higher disposable incomes, the increasing strength of online shopping and growing smartphone penetration across countries are some of the major drivers of retail over the past few years".

He further said that India offers immense growth opportunities in retail sector. "It can be said that growing urbanisation and socio-economic transformation in India, next only to China, offers plethora of opportunities for retailers to establish their presence in the country," he said.

According to the report, since the Indian market is largely underpenetrated, it offers significant retail growth opportunity in F&B (food and beverages), fashion and apparel segments.

Citing CBRE's 2017 report titled 'How Active are Retailers in APAC?', he said India was one of the top choices of retailers for expansion among the emerging retail markets in the APAC (Asia Pacific) region.

"The retail real estate sector is witnessing growing investment by leading PE funds and institutional investors at the back of growing consumer demand, stable economic environment and quality real estate development," he explained.

India displaced China to top AT Kearney's 2017 Global Retail Development Index, encouraging several global brands to re-evaluate opportunities in this market. "Structurally, nearly 60 per cent of India's GDP is driven by domestic private consumption, as compared to 40 per cent in China.

However, India is still behind global markets on the maturity curve: Penetration of organised retail and e-commerce combined is estimated to be 25 per cent by 2021," said Aashish Agarwal, Senior Director (Head-Consulting), Colliers International India, in the report.

However, organised retail is projected to reach $1.3 trillion (nearly Rs 92.53 lakh crore) in value by 2020.

"The Government's timely move to allow 51 per cent FDI in multi-brand FDI and 100 per cent FDI in single brand retail via the automatic route was the icing on cake.

Online retail also saw exponential growth and is, in fact, expected to attain at par positioning vis-a-vis physical retail in the next five years," said Anuj Puri, Chairman, Anarock Property Consultants, in the report.