A report by management consulting firm McKinsey & Company has forecast India’s fast growing retail sector will be worth US$450bn by 2015, and that organised retail will account for 14-18 per cent of the market, up from the current 5 per cent.
The report, titled ‘The Great Indian Bazaar’ according to the Financial Times, predicted the market would be metamorphosed by the rise of an organised retail industry with 300m customers.
A report commissioned by the Indian government valued the retail market at US$322bn last year.
The Indian retail market’s ‘mum and dad’ store foundation is considered one of the most undeveloped in Asia, but both Indian and foreign chains have struggled to take a share of the sector.
Restrictive regulations and a 12m strong lobby of small shop owners have hamstrung the entry of retail giants like Carrefour. Reliance Fresh, a grocery chain owned by home-grown company Reliance Industries, was even forced to close stores in the face of protests.
The report counselled retailers looking to enter the Indian market to keep four things in mind; innovative formats, customer insight, efficient and self-sufficient operating platforms and empowered front-end selling teams.
Flexibility was the key to profitability in the Indian market, the report said, rather than ‘cut and paste’ foreign formats.
