Guidelines & Cautions to Indian food & grocery
Retailers__________________________________________________________________Guidelines & Cautions to Indian
food & grocery
“Convenience format” Retailers ©_________________________________________________________________3
India tops the AT Kearney's Annual Global Retail Development Index (GRDI) for the thirdconsecutive year
. The Indian retail market, which is the fifth largest retail destination globally,is estimated to grow US$ 427 billion by 2010
.In this growing market, organized retail has awhopping growth rate of 49.73 percent
. A reportby Images Retail estimates the number of operational malls to be more than 412 by 2010 andfurther 715 malls by 2015 in spite of rising real estate costs. In India, currently eighteen retailers
are playing in the food and grocery convenience format store and some more are expected to jointhe race. The numbers of convenience format retail stores of almost all the retailers are growingtremendously. Bigplayers like Reliance Retail, RPG Group, Future Group, Tata, WadhawanFood Retail, Aditya Birla Group, Subhiksha and others are on a nationwide expansion mode; wecan expect over 15000 c-stores by 2010
.From the consumer’s perspective, the expenses on food and grocery are highest in their monthlyhousehold budget. The sales volumes, of stores in general, depend a lot on this factor. MGIresearch quotes that the expenditure on necessities
(food, beverages & tobacco) will reducefrom 42 percent
in 2005 to 25 percent in 2025. This makes the fate of c-stores quite uncertainand questions arise as toa) How long this convenience format retail chain lead over other formats?b) Will convenience retail stores lead as long as kirana stores had led in India?c) Do better prospects lie forhypermarkets?The answers lie in the forthcoming sections. A look at the GDP chart gives us a fair idea aboutthe relation between GDPgrowth rate and retail sales.
GDP, Private Final Consumption Expenditure and Retail SalesGrowth
, 1994-07(Compound Annual Growth Rate)
1994-95 to 1999-00 2000-01 to 2002-03 2003-04 to 2006-07
Real GDP 6.6 4.7 8.7Real private final consumptionExpenditure 5.7 4.0 6.7Retail sales 13.6 4.8 10.9As GDP growth rate is indicative of the retail sales growth and income of households. Itis likelythat the shift from convenience format to hyper market will be much swifter provided the growthrate of GDP remains as itis today.