Organised retail in India to triple by 2010: CRISIL

on Thursday, April 7, 2011
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.

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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