Retail shows revival signs, but far away from recovery

Written by Mona Mehta | Mumbai | Updated: Jul 3 2009, 02:34am hrs
Growth in the Rs 45,000-crore organised retail industry has revived by 10 to 15% in the first quarter of 2009-10 after slowing down to 5% in the fourth quarter of 2008-09. This is a far cry from 35% growth recorded in January-March 2008 period. Indian retail growth has revived on account of real estate correction in major metros.

Gaurav Marya, president of Franchise India Holdings, told FE, In the next two quarters, Indian retail market is expected to witness even more growth as higher deliveries of malls will start emerging. With the move, there will be 50 million sq ft of new retail space on the block.

According to Marya, A new consolidation phase has just began in Indian retail industry where big brands will be seen acquiring the small retailers to form a new retail structure. Meanwhile, small retailers, too, will club together to form new brands in near future.

Recently, Gitanjali Group is understood to have taken over MobileNext stores and plans to operate the stores as well, as confirmed by Sadanand Pawar, president of Gitanjali Group. However, he refused to divulge further details.

Fully-funded mall owners are coming with realistic offerings very soon to facilitate retail investments in interiors and consolidation of the back-end operations whereas bigger retailers will acquire small retailers. Kumar Rajagopalan, chief executive officer, Retailers Association of India, told FE, In the next two quarters, there will be an emergence of those 100 new malls whose 80% construction work has been completed. Hence, retailers now can look forward to anchor tenants and cash in on the running realty correction opportunity.

For instance, Entertainment World Developers Pvt Ltd (EWDPL) is facilitating realistic offerings to retailers. The share of the Indian retail market, the fifth largest retail destination globally, in the countrys GDP was 8 to10% in 2007. It is currently around 12% and is likely to reach 22% by 2010, according to industry experts.

Sanjay Chugh, national head - business development (retail) of Jones Lang LaSalle Meghraj (JLLM), said, Often, smaller brands find it challenging to grow on their own strength in the current market environment. While smaller brands are strong in their regional markets, partnering with larger brand/retailer gives them access to a larger retail footprint, lucrative catchments and retail space spread across expansive territories, which are controlled by these larger retailers.