Investment in Retail Sector

Retail has emerged as one of the most promising sectors in the
Indian economy. Greater variety and maturity is expected of the
retail real estate market, though. The new and large formats and
the entry of retail giants are indicative of the immense opportunities
existing in Indian retailing. The country’s consumer culture,
business practices and industry dynamics are not lost on the international
retailer community.

India’s more affluent shoppers constitute no mean figure. It’s
6 million strong middle-class consumers and above-average income
family groups want to benefit from the variety modern retailing
offers. India rates as the fifth most attractive emerging retail
market in the world. There is a lot to be explored as well. India’s
highly individualistic consumer mentality has mall developers
quickly adapting to local cultures and traditional preferences.
Some new genres of malls include the Automobile mall, the Gold
Souk and the Wedding mall, which provide a one-stop shopping experience.

The size of the retail industry in India is expected to touch
USD 450-500 billion by 2010. Within the retail sector, grocery
is the biggest component with 50 per cent share. Apparel is the
next high growth area in the retail sector.
The Indian real estate sector has attracted FDI worth $7.5bn in
FY06. Retail is among the Indian real estate sector’s primary
drivers. India is now in the international investment spotlight.
It has resulted in raising national income of India while lowering
prices and improving the quality and selection of services and
products for consumers. The retail sector has the potential to
become the largest source of employment expected to generate around
15 million jobs within the next few years

What is helping the trend is a paradigm shift in consumer preferences.
The consumer is all for an organized retailing experience of global
standards. The sector is witnessing a huge revamping exercise.
New formats such as departmental stores, hypermarkets, supermarkets
and specialty stores have been hugely lapped up in metros and
second-rung cities. The Indian retail is coming into its own.

The policy of permitting 51 per cent FDI in single-brand product
retailing has led to the entry of only a few global brands such
as Nike (footwear), Louis Vuitton (shoes, travel accessories,
watches, ties, textiles ready-to wear), Lladro (porcelain goods),
Fendi (luxury products), Damro (knock-down furniture), Argenterie
Greggio (silverware, cutlery, traditional home accessories and
gift items) and Toyota (retail trading of cars), into retail trading.
A 12-billion euro French luxury industry is also eyeing the domestic
luxury segment to make a presence through retailing directly.