According to a study conducted by CRISIL Research and
Information Services, the organised retail industry in India is expected to
grow 25-30 per cent annually and would triple in size from Rs35,000 crore in
2004-05 to Rs109,000 crore ($24 billion) by 2010-11. However CRISIL has cautioned
that organised retail sector will slow down to single digit growth after five
or six years unless the industry brings in an innovative ''India specific''
approach through expansion of the network.
Narasimham, head of research at CRIS INFAC said for organised retail to grow to such proportions an investment of approximately Rs3,100 crore per year was required in the country. He said the food and grocery were the fastest-growing segments in the country, with revenues expected to grow by five times over the next five years.
The slow down in sales' volume after five years would result mainly from saturation of demand in major metros, currently witnessing an annual growth rate of 25-30 per cent due to surplus income of the young generation.
Narasimham, head of research at CRIS INFAC said for organised retail to grow to such proportions an investment of approximately Rs3,100 crore per year was required in the country. He said the food and grocery were the fastest-growing segments in the country, with revenues expected to grow by five times over the next five years.
The slow down in sales' volume after five years would result mainly from saturation of demand in major metros, currently witnessing an annual growth rate of 25-30 per cent due to surplus income of the young generation.
Ajay Dwivedi CEO CRIS said metros and mini-metros offer maximum scope for
growth with six times more in sales volume, as compared to tier-II cities, he
said. Hence, it is not necessary to expand the hypermarket super mall to
mini-metros and tier-II cities in the immediate future, he said.
Narsimhan said FDI in retail was necessary to sustain the investment-linked
growth but felt that the approval of FDI from the authorities would come by the
end of 2006 as in the meantime this would allow domestic players to improve
their position in terms of business expansion and financial growth, he said.
Though food and grocery stores account for the largest share of retail spent
by the consumer at about 76 per cent, and nearly 99 per cent of this market is
in the unorganised sector. But according to him this may change in the next few
years as it is estimated that food and grocery revenue in the organised
retailing market would multiply five times, taking the organised shares of the
market to 30 per cent.
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