A marketing consultant has made a rather brave prediction about the Indian retail industry. Nearly half of the malls will close down by March 2010, says Samsika Marketing Consultants chairman Jagdeep Kapoor.
The prediction may prove to be too pessimistic. But there are early signs that the Indian retail industry is slowly losing steam. Growth in same-store sales—industryspeak for revenues from existing outlets—has been anaemic. Profit margins in the organized retail industry have been dropping. And there have been perpetual rumours of impending mergers and acquisitions.
It is clearly too early to say that India’s initial retail boom has ended. The way we shop is bound to change in the coming years. But we could see less euphoria over the next year or two as the industry halts to catch its breath and consolidate.
The big policy issues have dominated retail debate in India. Perhaps it’s time to examine store economics as well.