Organised retail growth story finally takes off
Apple Inc CEO, Tim Cook's aspiration to set up stores in the world's fastest growing smartphone market finally seems to be making headway thanks to the recent policy announcement on single brand retail where the local sourcing clause for single brand retail companies would be waived off for the first five-years of their operations in India. So, global retailers like Apple Inc can now come to India, set up shop without having to necessarily source for their global operations from India, at least for the next five years.
When the Apple Inc head honcho had visited India in 2016, the government had approved his proposal to set up stores in India under the single brand retail policy, but had refused to ease the 30 per cent local content sourcing
g clause.
The bigger good news, however, is that the Indian organised retail sector as a whole is poised for exponential growth. A recent report by Edelweiss Securities says that India's organised retail sector is all set to grow in the region of 13 per cent CAGR to become a $166 billion industry in FY 2025 from $55 billion in FY2016.
While rising disposable incomes, younger demographics and rising urbanisation are the obvious triggers, the Edelweiss report says that demonetisation and GST have resulted in a large number of consumers moving to organised retail. To add to this, with every modern retailer looking at the omni-channel model more seriously than ever, organised brick and mortar retail surely seems to be on a growth trajectory.
The likes of Future Group, Reliance Retail and Aditya Birla have over the past few years tested various business models and have finally zeroed down upon their operating model. They have optimised their store sizes and their SKUs so that they are able to get high profitability per sq.ft.
Market rating agency, CRISIL, expects the market share of organised retail in India to rise to 10 per cent by fiscal 2020, compared to 7 per cent last fiscal. Though the Government's decision to permit 100 per cent FDI in single-brand retail under the automatic route will surely help in stepping up the growth, the CRISIL report says that it had already expected the market share of organised retailers to grow to 9 per cent by fiscal 2020, based on healthy revenue growth of 18 per cent of organised brick and mortar (B&M) retailers.
When the Apple Inc head honcho had visited India in 2016, the government had approved his proposal to set up stores in India under the single brand retail policy, but had refused to ease the 30 per cent local content sourcing
While rising disposable incomes, younger demographics and rising urbanisation are the obvious triggers, the Edelweiss report says that demonetisation and GST have resulted in a large number of consumers moving to organised retail. To add to this, with every modern retailer looking at the omni-channel model more seriously than ever, organised brick and mortar retail surely seems to be on a growth trajectory.
The likes of Future Group, Reliance Retail and Aditya Birla have over the past few years tested various business models and have finally zeroed down upon their operating model. They have optimised their store sizes and their SKUs so that they are able to get high profitability per sq.ft.
Market rating agency, CRISIL, expects the market share of organised retail in India to rise to 10 per cent by fiscal 2020, compared to 7 per cent last fiscal. Though the Government's decision to permit 100 per cent FDI in single-brand retail under the automatic route will surely help in stepping up the growth, the CRISIL report says that it had already expected the market share of organised retailers to grow to 9 per cent by fiscal 2020, based on healthy revenue growth of 18 per cent of organised brick and mortar (B&M) retailers.
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