India losing the retail race?

Feb 11 2014, 13:18 IST
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SummaryIndia's attempt to attract big doses of FDI in retail trade has been facing many hurdles with some states...

India's attempt to attract big doses of FDI in retail trade has been facing many hurdles with some states, especially the BJP-ruled ones and Delhi, where the newly-elected AAP is in power, closing their doors on foreign retailers. While big retailers are anxious to tap the world's second-largest consumer market, India may also be missing the benefits of faster growth in organised retail.

A Deloitte report on retail sector points to some interesting facts. World's top-250 retailers have weathered the rough economic circumstances and nearly 80% of them (199 companies) posted an increase in retail revenue with many of them having grown their revenues faster than the global economic growth.

Despite tough economic conditions, revenues for the world’s 250 largest retailers reached $4.3 trillion in the last fiscal year (June 2012 through June 2013). The CAGR growth in retail revenues of the top retailers have been pretty strong compared to the growth in the global economy—Walmart's revenues grew 4.4% between 2007 and 2012 while Tesco's grew by 6.2% and Costco by 9%.

What's important, emerging market retailers accounted for more than half (26) of the world’s 50 fastest-growing retailers in the fiscal year 2012. While home-grown retailers of China, Russia and South Africa figured prominently in the top-50 fast-growing retailers, not one Indian company made it to the list.

Interestingly, most of the world’s top-50 e-retailers are part

of the top-250 retailers globally. Top-250 companies with e-commerce operations generated an average 7.7% from their online sales in 2012. From a regional perspective, e-commerce sales grew fastest for Asia/Pacific retailers. Surely, EMEs such as China are gaining from such growth in retail and e-commerce. For those opposing FDI in retail in India, its time for some introspection.

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