Modern retail is entering a new phase of growth in India. Over the past 18 months, a large number of both Indian and multinational companies have announced their intention of starting operations here.
During the next couple of months, we will see new retail formats emerging in the Indian retailing landscape. Retailers will discover and experiment with new customer segments and design innovative formats.
At the same time, more product categories will come under the fold of modern retail, providing a large impetus to speciality retailing in the country.
The market for luxury retail is finally gaining critical mass here, and this category is expected to see significant growth. Another segment that will see a lot of activity is business-to-business retailing.
Most retailers are aiming for bigger play in the wholesale segment, and one will notice large wholesale retail formats being launched to cater to small and medium business houses.
Specialized wholesale formats such as office stationery retailing will also make their debut in the Indian market.
Existing formats such as departmental stores, hypermarkets and convenience stores, too, will go through a constant process of evolution, keeping pace with the changing needs and expectations of the Indian consumer.
Within retail stores, the advent of consumer finance and retail media are already playing a major role in shaping customer aspirations and catalyzing consumption.
They will now make further inroads, into shopping malls. One will soon find customized credit facilities, even for low-ticket items, along with savings and investment products being available within retail stores.
At Future Group, within the next few months, we will be offering life and general insurance products within our retail outlets through our joint venture partnership with Italy-based Generali.
By 2010, it is expected that there will be around 500 shopping malls covering more than 250 million sq. ft.
A significant amount of supply in the retail real estate space is expected to come in during 2009. While the impact of the large real estate supply coming on-stream on prices is yet to be fully ascertained, 2010 will provide the answers for the long term growth of the modern retailing sector in India.
Answers to questions on whether the Indian consumer market can sustain such a large growth in modern retail, whether more and more people will join the consuming class, and what the real market size is in small cities will become clearer.
We believe that, by 2010, we will be able to reach a conclusion on the consumption potential in India, the scope for inclusive growth in modern retail and the role of modern retail in driving economic growth. By then, it also won’t be surprising to find a few retailers far less enthusiastic about the business.
Even as modern retail enters the next phase of growth, the competitive landscape in the years ahead will start to unfold in the year 2008 itself.
Kishore Biyani is CEO, Future Group