The retail industry in India is of late often being hailed as one of the sunrise sectors in the economy. India's strong growth fundamentals,high saving and investment rates,fast growth in labour force and,increased consumer spending has made it a very favourable retail destination globally .Indian consumers continue to urbanise,started spending more on non-food purchases and have more exposure to brands,this has resulted in powerful,more discerning consumer class.ndia's nearly 1.2 billion population is also an attractive target for the global brands.
India's retail sector is on its way of modernisation.Traditional markets are making way for new formats such as departmental stores,supermarkets and speciality stores.Westernised malls can be seen fast appearing in metros and tier-II cities,introducing the Indian consumer to an implausible shopping experience.
AT Kearney, the well-known international management consultancy firm, annually ranks emerging market economies based on more than 25 macroeconomic and retail-specific variables through their Global Retail Development Index (GRDI). In its 2011 edition ,it has ranked India fourth indicating that the country is one of the most attractive market for global retailers to enter. It has made India the cause of a good deal of excitement and the cynosure of many foreign eyes.
Organised Vs. Unorganised Sectors
The Indian retail industry is divided into organised and unorganised sectors.The Indian retail sector is highly fragmented, with a major share of its business is being run by unorganised retailers like the traditional family run stores and corner stores.The organised retail however is at a very nascent stage, though attemps are being made to increase its proportion bringing in a huge opportunity for prospective new players.
Unorganised Retail Sector
Indian retail is dominated by a large number of small retailers consisting of the local kirana shops, owner-manned general stores, chemists, footwear shops, apparel shops, paan and beedi (local
and tobacco) shops, hand-cart hawkers, pavement vendors, etc. which together make up the so-called "unorganized retail" or traditional retail. The last few years have witnessed the entry of a number of organized retailers opening stores in various modern formats in metros and other important cities.
Unorganized retailers normally do not pay taxes and most of them are not even registered for sales tax, VAT, or income tax.
Organised Retail Sector
Organised retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses.
According to AT Kearney report for the year 2011,Organised retail accounts for 7 per cent of India's roughly US$ 435 billion retail market and is expected to reach 20 per cent by 2020.Food accounts for 70 per cent of Indian retail,but it remains under-penetrated by organised retail.Organised retail has a 31 per cent share in clothing and apparel and continues to see growth in this sector.The home segment shows promise ,growing 20 to 30 per cent per year.India's more urban consumer mindset means this sector is poised for growth.