NEW DELHI: India pipped China to take the top spot in retail sales in 2017, which surpassed the $1trillion-mark achieved last year and the sector is expected to double in size by 2020, the 16th Global Retail Development Index by management consulting firm A.T. Kearney shows.
The government’s decision to relax FDI regulations in key areas of the retail sector has provided further boost to its growth. The government has allowed 100 per cent foreign ownership in business-to-business e-commerce businesses and for retailers that sell food products.
“The government is taking steps to eliminate the federal and state rules that curtail retail development, and new regulations are being developed to attract investment and increase consumption…,” said Debashish Mukherjee, partner with A.T. Kearney.
India’s retail sector is projected to grow 30 per cent annually and touch $48 billion by 2020. The report highlighted Indian retail has benefited from the rapid growth in e-commerce. Retailers have been quick to seize the opportunity with 86 per cent of e-commerce dominated by pure-play online retailers in 2016.
“Understanding the size and complexity of India’s retail market, especially the dynamics at the state level, as well as the nuances across the nation (with a population of 1.33 billion) is vital if retailers are to succeed,” Himanshu Bajaj, partner with Consumer Industries & Retail Products Practice at A.T. Kearney India, added.
H&M has opened 15 stores within two years of entering the Indian market, mobile handset maker Xiaomi intends to roll out single-brand retail stores across the country, and German sports goods makers Puma and Adidas are looking for government approval to operate fully owned retail stores and online portals.
IKEA, the world’s largest furniture retailer, plans to invest $1.56 billion to set up 25 stores across India. Amazon and Walmart have aggressive rollout plans, with Walmart aiming to open 50 cash-and-carry stores in the next 4-5 years.
Saks Fifth Avenue is in discussion talks with local partners to open two stores.