The opportunity is based on the fact that India has 17% of world population and 3% of global consumption with per capita income quadrupling over the last 15 years to $1,600 and consumption being driven beyond the metros.
Organised retailers in the country will have to revisit their growth strategy as they are found short of the early promises shown by the industry, states a PricewaterhouseCoopers (PwC) India report released on the sidelines of India Retail Forum. “An 8-10% penetration of organised retail is far short of initial estimates that has led to several global and Indian players exiting or not achieving profitability and scale,” said Anurag Mathur, retail and consumer goods practice leader, PwC India. According to the survey conducted by PwC India with 40 large retailers, including global retailers, the reason enumerated by them for not being able to match expectations included ground realities that were different than envisioned. This resulted in faltering on execution in a bid to scale up fast. In the process, value proposition got ignored and competition from well-funded online players posed a new challenge, the report stated. The infrastructural challenges for retailers cited in the report included availab-ility of quality real estate, access to capital and procurement, developing and retaining talent.
Moreover, rapid scale expansion resulted in a large percentage of new stores that ended up putting pressure on profitability. The ‘one size fits all’ approach too didn’t work in the heterogeneous Indian market, the report highlighted. Also, online competition posed a new challenge as discounts and sales have become a way of life and there has been a shift in how consumers buy with increased focus on non-food grocery retail by the consumer, the report stated. However, Indian organised retail remains an unparalleled opportunity as the market size is seen rising to $983 billion by 2020 from $553 billion in 2016. The opportunity is based on the fact that India has 17% of world population and 3% of global consumption with per capita income quadrupling over the last 15 years to $1,600 and consumption being driven beyond the metros. India’s high economic growth, strong positioning as investment hub and stable government from a global perspective, economic and tax reforms, improving market sentiments, large earning and spending by a young population, urbanisation, burgeoning e-commerce and digitisation at domestic level, will act as the main drivers in the retail market growth.