Indian retail sector to see fast expansion and consolidation


March 16, 2011

China Daily , Mumbai, March 16, 2011


The fledging retail sector in India will enter an expansion period and witness large-scale consolidation with increasing competition especially from international players, said a report by retail consultancy firm Technopak Advisors on Wednesday.

Technopak Advisors forecasts that there will be more movements of retailers to smaller cities and rural area and over 25 to 30 retail companies in India will post one billion U.S. dollars of revenues.

Speaking at Consumer Investment Summit 2011, Saloni Nangia, the senior vice president of Technopak Advisors said there could be some concrete steps by the government to lift the ban on foreign investment in Indian multi-brand retail businesses within 2011.

Saloni Nangia said there could be some consolidation of local retailers by foreign rivals after five to eight years of the opening-up of Indian multi-brand retail sector.

Now, India doesn’t allow foreign companies to open or hold share of multi-brand retail stores with single-brand retail business accessible so as to protect domestic employment. "We definitely will invest in retail sector once the ban on foreign investment is lifted," said Shankar Prasad, senior vice president with private equity company Everstone Investment Advisors.

Still, local retail companies also have big plans to grow and they have the advantage of knowing their customers better in the diverse Indian market, said Devangshu Dutta with Third Eyesight, retail consultants.

The most promising retail formats will be super-markets, specialty stores for large Indian cities and hypermarkets, cash and carry stores as well as category killer shops for the rest of India with more spacious settings, according to the report.

Convenience will be key for modern consumers who prefer "all-under-one-roof" malls and non-store shopping via the Internet, TV and others, the report said.

Retailers should not only pay attention to price, but also fashion, quality, convenience, service, experience, innovation and other elements to offer right "value" to customers.