Thursday, December 31, 2009

Retail: The wonder decade



The transformation of retail in the post-liberalisation decade was dramatic. It not only forever changed our consumption habits and patterns, but also left indelible imprints on the landscape of our cities in the form of monstrous malls and superstores.

THE FIRE’S HERE

Organised retail grew at a blistering pace. In 2000, it was so small that formal estimates of the industry’s size are unavailable. But in 2002, it grew to a $2-billion industry. Today, according to consultant KPMG, the sector has an annual turnover of $37 billion, while the retail industry is at about $350 billion. This year, consultant AT Kearney ranked India as the most attractive emerging retail destination in the world

THE RISE OF ORGANISED RETAIL

In 2000, today’s marquee retail chains were fledgling operations, with one or two stores. Piramal Group’s Crossroads, considered India’s first mall, started operations in 1999. For retail chains such as Pantaloons, Big Bazaar, Shoppers’ Stop, Spencers and FoodWorld, it was a decade of scorching growth

Big profits spawned ambitious expansion plans, many of which ran into roadblocks when real estate prices zoomed ahead of the economy. Retailers started hurting further when consumer confidence levels took a hit following a nasty economic downturn in major Western economies in September 2008. Some retailers, who did not recast plans in time or weren’t nimble enough, went out of business, or are teetering on the verge of insolvency

The decade that created a major new industry is ending with many of the players in the sector in disarray

POLITICS AND FDI

The rise of organised retail and the thorny issue of foreign direct investment made headlines as small ‘kirana’ store owners’ concern that organised retail would put them out of business became a political issue. Violent protests erupted across the country; Uttar Pradesh even banned the operations of Reliance Retail

Global majors such as Wal-Mart and Carrefour, facing slowing growth in home markets, forged partnerships in India, where foreign capital is allowed only in cash and carry stores, or stores catering to other businesses and not the end consumer

ET Comment

FDI in retail a distant dream


Foreign Direct investment in multi brand outlets will continue to be a political hot potato even as domestic retailers shed their animosity towards their foreign counterparts and say they can benefit from the transfer of technology, superior supply chain management and logistics expertise, apart from capital, of foreign retail groups. The next two years will see consolidation in the Indian market. Chains with less than 100 stores will either merge with large players or shut shop. Furthermore, shoppers are unlikely to see the mindless expansion of the past two years.

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