Retail Bane or Boon

big question
what does India hold for the big retail players?

the two most important things for the retail industry
1)market 2)growing economy

The INDIAN middle class population is placed around 480 million with montlhy household income of $150 to $1000.
This number is greater than the total population of many countries.
The avg household income has grown at a 5% CAGR over the last decade

whats more important is the age profile of the spenders
we are one of the youngest nations in the world bettering china.
around 52% of the population is below the age of 25.
a younger population leads to a higher possibility to spend on consumption.

At the projected Indian GDP growth in the next five years, the nominal per capita income is expected to double. so the disposable incomes would increase. It is estimated that the organised retail sector will be 20% of the total retailing by 2008.

India displaced Russia to move from second place to first in the 2005
and 2006 global retail development index released by AT Kearney.
the index is a measure of retail investment attractiveness among 30 emerging markets across the globe. The CII-AT Kearney retail study shows that retailing is the largest contributing sector to the country's GDP. The retail sector contributes about 10% to the country's GDP compared to 8% in china, 6% in Brazil and a matching 10% in the US
currently the value of the retail sector is estimated to be around $270 billion with a growth rate of 5.7% per annum according to the India retail report 2007.

The unorganised retail forms a major chunk of the retail industry. The organized sector constitutes about 9% of the total industry, compared to 20% in china, 40% in Brazil.


How would the organized retail going to revolutionize the industry?

63% of the total retail is of food and grocery according to India retail report 2007
Wastage estimated in the Indian food chain is valued at over Rs 500 billion ($10 billion) annually. A study by the Indian Council for Research on International Economic Relations (ICRIER) has also shown that only about 2 per cent of fruits and vegetables are processed in this country. In this backdrop, it is felt that there is no option but to allow big retail chains to make huge investments needed to create an efficient and modern Agro processing industry

They are introducing the Indian farmer to better seeds, new technology, supply chain management and food processing. These companies have already brought in technology that increases the shelf life of fruits and vegetables.

What these retail players will do is eliminate the middleman in the mandi markets who exploit our Indian farmers. what is required is a amendment to the agricultural produce marketing committee(APMC) act which does not allow the farmer to sell the produce in the open market.

16 states have amended the act but rules have not been framed according to the amended act. Currently three states Punjab, up, Maharashtra allow farmers to lease land. Pepsico has acquired land from the Punjab agricultural university and it uses R&D to increase the potato and tomato yield by three times. Other major companies are also investing heavily in the farm sector.