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Of the overall retail market in India, unorganised players controlled 92 per cent market share
during 2013. Organised retail is expected to account for 24 per cent by 2020. Food and
grocery accounted for nearly 69 per cent of total revenues in the retail sector, followed by
apparel (8 per cent) in 2013. Rapid emergence of mega malls and hypermarkets are
augmenting the growth of organised retail in the country.
The Government of India has approved 51 per cent foreign direct investment (FDI) in multibrand retail and increased foreign direct investment (FDI) limit to 100 per cent in singlebrand retail and cash and carry (wholesale) trading and exports. It also plans to introduce
Goods and Service Tax (GST) as a single unified tax system from the next fiscal year.
India's strong growth fundamentals, along with increased urbanisation and consumerism,
offer immense scope for retail expansion for foreign players. Rapid emergence of organised
retail outlets, such as mega malls and hypermarkets, are augmenting the growth of organised
retail in the country. Retailers have made constant improvements in supply chain and logistics
for competitive advantage and meeting consumer demands. E-commerce is expected to be the
next major area for retail growth in India. The industry is projected to touch US$ 200 billion
by 2020.
The Indian retail industry has presently emerged as one of the most dynamic and fast paced
industries as several players have started to enter the market. It accounts for over 10 per cent
of the countrys gross domestic product (GDP) and around eight per cent of the employment
in India. The country is today the fifth largest global destination in the world for retail.
Several corporates have planned to exploit the opportunities in the Indian retail space, such as
Reliance Industries Ltd (RIL), which has lined up capital expenditure of Rs 1.8 trillion (US$
28.94 billion) for the next three years for its petrochemicals, telecom and retail ventures.
With the growth in the retail industry, the corresponding demand for real estate is also being
created. Further, with the online medium of retail gaining more and more acceptance, there is
a tremendous growth opportunity for retail companies, both domestic and international.
Market Size:Indias retail market is expected to double to US$ 1 trillion by 2020 from US$ 600 billion in
2015 driven by income growth, urbanisation and attitudinal shifts, highlighted the Boston
Consulting Group and Retailers Association of Indias report titled, Retail 2020: Retrospect,
Reinvent, Rewrite.
While the overall retail market will grow at 12 per cent per annum, modern trade will grow
twice as fast at 20 per cent per annum, and traditional trade at 10 per cent, according to a
report titled Retail 2020: Retrospect, Reinvent, Rewrite by Boston Consulting Group and
Retailers Association of India.
The retail spending in the top seven Indian cities of India currently amounts to Rs 3.58
trillion (US$ 57.56 billion), with organised retail penetration at 19 per cent in 2014. It is
expected that the online retail will be at par with the physical stores in five years
Market size of Indian retail industry:The total market size was US$ 490 billion in 2013, registering a CAGR of 6.1 per cent since
1998.
India is expected to become the worlds fastest growing e-commerce market on the back of
robust investment activity in the sector and the rapid increase in internet users. It is expected
that Indias e-commerce market will grow from US$ 2.9 billion in 2013 to over US$ 100
billion by 2020.
E-tailers are betting on more Indians switching to shopping online, with a projection of 200
million new consumers by 2017, according to a report released last year by Accel India,
Investments:-
The Indian retail industry in the single brand segment has received foreign direct investment
(FDI) equity inflows to the tune of US$ 275.38 million in the period April 2000January
2015, according to the Department of Industrial Policies and Promotion (DIPP).
With the rising need for consumer goods in different sectors including consumer electronics
and home appliances, many companies have invested in the Indian retail space in the past few
months. Some of them are:
Paytm plans to set up 30,000 to 50,000 retail outlets where its customers can load
cash on their digital wallets. The company is also looking to enrol retailers - mostly
kirana stores - as merchants for accepting digital payments.
Mobile wallet company MobiKwik has partnered with Jabong.com to provide mobile
payment services to Jabong's customers.
DataWind has partnered with HomeShop18 to expand its retail footprint in the
country. Under the partnership, HomeShop18 and DataWind will jointly launch
special sales programs across broadcast, mobile and internet media to create greater
access of the latter's tablet range.
Amazon Inc and Flipkart India will invest nearly Rs 2,300 crore (US$ 369.87 million)
in the near term as they plans to acquire more customers in the country's fast-growing
online retail market.
FashionAndYou has opened three distribution hubs in Surat, Mumbai and Bengaluru
to hasten deliveries.
Abu Dhabi-based Lulu Group plans to invest Rs 2,500 crore (US$ 401.98 million) in
a fruit and vegetable processing unit, an integrated meat processing unit and a modern
shopping mall in Hyderabad, Telangana.
Investment options in organised retail India:Real estate's retail component is an attractive opportunity, which is currently attracting 29 per
cent of total investment in real estate.
In 2013, food & grocery accounted for nearly 69 per cent of total revenues in the retail sector,
followed by apparel (8 per cent).
Government Initiatives:Ms Nirmala Sitharaman, Union Minister of Commerce and Industry, Government of India
has stressed on India building a culture of branding and marketing its products to the rest of
the world. The ministry is also willing to take steps to start a Free Trade Agreement (FTA)
with the European Union (EU).
The Government of India has taken various initiatives to improve the retail industry in India.
Some of these initiatives are:
The Foreign Investment Promotion Board (FIPB) has cleared five retail proposals
worth around Rs 420 crore (US$ 67.53 million) from companies such as Bestseller,
Puma SA and Flemingo. Additionally, the board cleared three 100 per cent singlebrand retail proposals worth Rs 222.5 crore (US$ 35.77 million), suggesting renewed
interest in Indias growing retail market.
IKEA has entered into a memorandum of understanding (MoU) with the Government
of Telangana to set up its first store in India at Hyderabad. IKEA retail outlets have a
standard design and each location entails an investment of around Rs 500-600 crore
(US$ 80.38-96.46 million).
The Government of India is also in the final phase of talks with the states for the
Goods and Services Tax Bill to be implemented. This Bill is seen as a key to
facilitating industrial growth and improving the business climate in the country.
Road Ahead:The share of e-Commerce is growing steadily. Customers have an ever increasing choice of
products at the lowest rates. E-Commerce is probably creating the biggest disruption in the
retail industry and this trend will continue in the year to come. Almost everything is sold on
the internet now and this means that pretty much all of the retail industry faces the challenge
of either being a part of e-commerce or taking it head on.
For better prospects of this industry, as a whole, both organized and unorganized retail
companies should work together to improve the overall retail industry, while generating new
benefits for their own customers.
Also, the retailers should take advantage of digital retail channels (e-commerce), which
would enable them to spend less money on real estate while reaching more customers in tier2 and tier-3 cities. Nevertheless, the long term outlook for the industry remains to be positive
on the back of rising incomes, favourable demographics, entry of foreign players and
increasing urbanization.
Exchange Rate Used: INR 1 = US$ 0.016 as on March 24, 2015.
Top 10 Marketing Trends in Retail Industry:1.Boomers and Millennial will continue to heavily influence retail:Most boomers will be in their 60s and 70s next year, and retailers that cater to these
consumers would need to adjust to make shopping easier for them. As consulting firm PwC
noted, the Baby Boomer generation will age with increased financial resources and with a
greater emphasis on youth and vitality than previous generations. As a result, they not only
will tax manufacturers to adapt products to their specific post-retirement needs, but also will
require retailers to respond to their evolving needs as they approach the age of 70 in 2015.
Retail expert Georgenes Bender pointed out in VOAnews.com that this can already be seen
at some drugstore chains. Theyre re-setting their counters, not putting things too high or
too low, [and] theyre putting carpeting in the store, she told the publication.
On the flip side, Gen Ya young but equally largemarket segment will also be a major
influence in retail. Merchants who want to reach millennial will need to invest in mobile, as
they are the largest group of Smartphone owners (and adoption is still growing).
Speed is also an essential factor when it comes to reaching the Gen Y market. As a
generation that grew up in an age where almost anything is just a click away, millennial
have a tendency to be impatient. Retailers who want to engage them must invest in more
robust order fulfilment systems and fast (but excellent) customer service.
2. Social networks will serve as shopping platforms:The recent launches of shopping functionalities in the social realm (i.e. Facebooks and
Twitters buy buttons and Curalates Like2Buy platform for Instagram) tell us that social
is going to get a whole lot more shoppable in 2015.
Retailers that have already started participating in the trend include Nordstrom and Target,
which are using the Like2Buy platform on Instagram, and Home Depot, (RED), and
Burberry, which are testing Twitters buy button.
In the screenshots below, you can see how Nordstrom is leveraging Instagram and
Like2Buy to sell its products.
A customer whod like to purchase an item she sees on the retailers feed can tap on the
Like2Buy link found on Nordstroms Instagram profile. Clicking the link will take her to
the retailers Like2Buy site, which looks similar to its Instagram page. When the shopper
taps on an image, shell be taken directly to its product page, where she can find more
details and proceed to checkout.
3.Brands Will double down on Corporate Social Responsibility:Consumers these days are more drawn to retailers that invest in Corporate Social
Responsibility (CSR). A survey by Cone Communications and Echo Researchuncovered
that 87 percent of global consumers factor in CSR into their purchase decisions.
In 2015, we expect more merchants to launch ethical and good deed initiatives. Examples of
retailers pulling off CSR quite well include ModCloth, which recently signed an antiPhotoshop pledge, and Warby Parker, which implements a Give a Pair initiative to make
eye care more accessible to the less-fortunate.
How does CSR improve the shopping experience? Simple. It makes customers feel good
knowing that theyre contributing to a worthwhile cause. As Adrianne Weissman, owner of
apparel store Evelyn & Arthur told us, shoppers want to know the money they are
spending is not going into one persons pocket, but is truly making a difference in the
community they live in.
longer be effective.:Enriching and personalizing the shopping journey will no longer be limited to tailored
product recommendations and offers. Forward-thinking retailers will find additional ways to
make each customers experience unique and memorable. We predict that one of the areas
that theyll focus on is customer loyalty.
Customized perks will also be a big part of loyalty program success in the
coming year. Research cited by eMarketer revealed that consumers
have begun to expect more personalized offers and servicesnot just
blanket discountsin return for their participation in rewards programs.
Moreover, according to the study, consumers cited relevant discounts
and personalized offers as the top benefits of such programs.
POS TECHNOLOGY
Initiatives to make the cash register extinct will continue to go strong in 2015. Cloud-based
point-of-sale systems have proven that they can outperform old-fashioned registers in all
aspects (performance, functionality, looks) and an increasing number of retailers will
recognize this and make the switch.
Will you be one of the savvy merchants upgrading to a cloud-based POS system next year?
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3D PRINTING
We also anticipate 3D printing to slowly make its way into the retail world. Some
merchants, including online jewelry store Brilliance.com, have already found a use for the
technology. Brilliance is using 3D mock-ups to help customers try on different rings so they
can determine the right size, shape, carat, and diamond arrangement for their hands.
Next year, we expect the number of SMBs using big data and analytics to grow. Retailers
will realize that they need to rely on data in order to get to know their customers and
provide customized shopping experiences.
Fortunately, there are plenty of solutions that make data analytics accessible and affordable
for small and medium retailers.
Swarm for instance, gives brick-and-mortar stores the ability to analyze foot traffic so they
can make better decisions and tailor customer interactions. Theres also Collect, which gives
merchants insights into the spending habits of their top customers, allowing them to send
personalized rewards and offers.
Vendors will continue to develop and refine their solutions so they can provide the most
accurate and insightful data in the fastest and most convenient ways possible.
top priorities.
There are a number of ways retailers can better manage risk in the coming year. One is to
instill awareness and training across the entire organization to ensure that everyone knows
the importance of risk mitigation. Retailers can also be more selective of their vendors that
handle their data and processes.
We also expect merchants and solutions providers to come up with better ways to protect
customer data.
9. More ecommerce sites will set up shop offline :In 2014, we saw a number of ecommerce-first businesses expand into the offline realm.
Former online pure-play Birchbox, for example, opened its first physical shop in Soho last
July, while companies like Bonobos and Warby Parker doubled down on brick-and-mortar
Future Growth Rate of Retail Industry from 2013 to 2018:Retail sales worldwideincluding both in-store and internet purchaseswill reach $22.492
trillion this year, according to new figures from eMarketer. The global retail market will see
steady growth over the next few years, and in 2018, worldwide retail sales will increase
5.5% to reach $28.300 trillion.
This is eMarketers first-ever forecast of the global retail market and retail ecommerce sales
worldwide. The complete forecast also includes a breakdown of total retail and retail
ecommerce sales in 22 countries, as well as the number of consumers who shop and
purchase goods via the internet in each of those markets.
When it comes to retail products and services purchased on the internet, ecommerce will
account for 5.9% of the total retail market worldwide in 2014, or $1.316 trillion. By 2018,
that share will increase significantly to 8.8%, yet retail ecommerce will still account for just
a fraction of in-store purchases even as it nears $2.5 trillion by the end of our forecast.
The other two largest ecommerce markets, China and the UK, have much higher
proportions of online-to-total retail sales than the US, and ecommerce trends in each market
are unique. For example, digital buyersconsumers who purchase online at least once
during the yearwill represent only 27.5% of Chinas population in 2014, while more than
10% of all retail purchases occur via the internet. This points to the fact that consumers in
China who buy online do so often.
On the other hand, more than 73% of the UKs population will make a purchase online this
year. With ecommerce accounting for 13.0% of total retail sales in the UKleading all
countries by this metricthis high volume of digital buyers who purchase online often
positions the UK as the third-largest ecommerce market, despite being only eighth-largest in
total retail sales.