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Retail Industry in India and abroad

Retail Industry in India & Abroad

Overview, market size, growth trends, news resources

Boys growing up in the 1970s would, once in a while, be dragged to a textile showroom by their father or mother and asked to pick up a piece of cloth for a shirt or trouser. The choice made, they would once again be towed away, this time to a tailor’s shop, where the tailor and his assistant would give them some embarrassing moments while taking the measurements. Two weeks later, it would be time for another visit to the tailor’s to collect the shirt or trouser.

That was a slice of the good old, though slow and tedious, world of retailing (this is a good time to mention that the word “retail” comes from the Old French tailoring term “retaille”, meaning “to cut off,” “clip,” or “divide”).

In those days, only well-heeled parents could afford branded readymades for their sons—we aren’t mentioning girls because, in those days, most of them were lucky enough to get their dresses stitched by their mothers.

Today, boys and girls and men and women can all walk in and out of a fashion store inside an hour, happily holding heavy, logo-emblazoned shopping bags.

In case we are not quite predisposed to walk, we can just make a few clicks on our laptops to make all sorts of must-have merchandise, garments included, magically appear at our doorsteps.

Before long, we may even have our goods home-delivered by drones, no less: Walmart, Amazon, and other US companies have sought permission to use custom-built flying machines for just this purpose.

But till then, we may have to make do with traditional stores, modern retail outlets, and e-retail portals, all of which are doing very well, meanwhile. For the old and traditional “kirana” format, the strength is in its features such as lower prices and short-term credit.

However, the modern retail outlet seems to be gradually giving the pop-and-mom store many things to worry about—in terms of not only shopping experience but also promotions, discounts, and “free gifts.” Giving them all a good run for their money is e-commerce, with its ease of use and variety of goods.

They all must be doing many things right—the retail industry, both traditional and modern, in-store and online, is now worth $24 trillion in sales globally.

History of the Retail industry

In the US, the retail industry is said to have started developing in the 18th century, with general stores. Much later, in 1846, Marble Palace opened in New York, to sell European merchandise. In the late 1800s, Sears and Roebuck introduced the catalogue business and, in 1925, opened a chain of retail stores. Sears was the biggest player in the US retail world till 1989, when Walmart surpassed it.

When US suburbs began to grow after World War II, supermarkets began to flourish. The increased use of automobiles during 1920-1940 allowed people not only to travel to supermarkets far away but also to bring home sizeable quantities of goods.

Refrigerators at home meant that they could store perishables. With the population explosion in 1950-70, open-air malls came up, which led to the establishment of bigger supermarkets and hypermarkets.

In Europe, the Industrial Revolution laid the foundations for the consumer goods industry, and the retail sector began to grow. One of the first department stores to come up was probably Bennett’s in Derby, England, in 1734, according to Wikipedia.

However, the first department store as per records is Harding, Howell, and Co, which started business in 1796 at Pall Mall, London. Harrods started business in London in 1834.

India was also not to be left behind. According to an article in Spectrum: A Journal of Multidisciplinary Research, the year 1869 marked the beginning of the first phase of organised retailing in the country, with the opening of the Mumbai Crawford Market.

In 1874, Hogg Market opened in Calcutta. The second phase began with the opening of Bata stores in 1931 followed by DCM and Raymonds outlets. In the early 1980s, “Akbarallys” in Mumbai and Spencer’s and Nilgiris stores were opened in Chennai. Fair-price shops and defence canteens catered to millions.

Quick facts and statistics about the Retail industry

Of the $24 trillion in sales worldwide recorded by the retail market, hardly 6 percent, or $1.3 trillion, is accounted for by e-commerce, proving that epitaphs for the brick-and-mortar trade were premature. The global retail market is projected to grow to $28 trillion by 2018.

The US is well above other nations in the retail world, with a market size estimated at $4.5 trillion. But its reign is predicted to end by 2018, when China (market size $3 trillion in 2015) will likely surpass it.

In A. T. Kearney’s Global Retail Development Index 2015, which ranks 30 developing countries, China occupies the top slot. India takes the 15th rank, down from 5th rank in 2012.

The US and China are the biggest e-commerce markets, with their total combined sales adding up to 55 percent of the world e-market.

By 2018, China will account for 40 percent of e-retail, with sales touching $1 trillion, and the US 20 percent, or $500 billion. The UK, Japan, Germany, France, South Korea, Canada, Russia, and Brazil are the other top e-commerce nations.

E-commerce accounted for 6.5 percent of the total retail sales in the US, 4.6 percent in France, and 3.8 percent in Brazil. Its share was below 1 percent in India but 10.1 percent in China in 2014.

The top ten global retailer companies are Walmart (US, 2013 revenue $464 billion), Tesco (UK, $120 billion), Costco (US, $120 billion), Carrefour (France, $103 billion), Kroger (US, $96 billion), Amazon (US, $88 billion), Lidl (Germany, $87 billion), Metro AG ($85 billion), The Home Depot ($74 billion), and Aldi (Germany, $73 billion), according to Wikipedia.

Retail industry in India

Market size, categories, segments

The Indian retail market was estimated to be worth roughly about $600 billion at the beginning of 2015, and is expected to expand to $1.3 trillion by 2020. Ninety-two percent of the revenue is generated by the unorganised sector (consisting of traditional outlets not under the tax net), according to a report by KPMG. Modern trade (supermarkets, hypermarkets, and other organised retail stores) accounted for $60 billion. E-commerce is estimated to be worth $6 billion and is projected to increase to $70 billion by 2020.

The Indian retail market can be categorised as (1) traditional outlets (vegetable, fruit, and grain markets and fairs); (2) established outlets (corner shops, kiosks, independent stores, department stores, supermarkets, hypermarkets, speciality stores, franchise stores, discount stores, and wholesale cash-and-carry outlets); (3) cooperative/government stores (Mother Dairy stores, khadi and village industry outlets, cottage industries emporiums, defence canteens, and fair-price shops); and (4) e-commerce (online travel ticket and hotel accommodation, leisure goods, electronic goods, entertainment electronics, etc.).

The main segments of the overall retail industry are food and grocery (60 percent share); apparel (8 percent); telecom (6 percent); food service (5 percent); jewellery (4 percent), pharmacy (3 percent); consumer electronics (3 percent); and “others” (11 percent). However, the apparel segment tops the list of organised sector segments at 33 percent, followed by food-grocery and telecom (11 percent each) and consumer electronics (8 percent) for the second and third ranks.

Among the top retail groups/companies in India are Future Group (Big Bazaar, Pantaloons, Brand Factory), Tata Group (Titan and Tanishq outlets, Croma, Westside, Landmark), Reliance Retail (Reliance Supermarkets, Reliance Digital), K. Raheja Corp Group (Shoppers Stop, Crossword), Aditya Birla Group (More outlets), RP-Sanjeev Goenka Group (Spencer’s Hyper, Spencer’s Daily), ITC-LRBD, and Fabindia.

The retail industry uses four types of “channels” to route products from the manufacturer to the customer. They are the direct channel (producer to customer), retailer channel (producer to retailer to customer), wholesale channel (producer to wholesaler to retailer to customer), and agent/broker channel (producer to agent/broker to wholesaler to retailer to customer). Modern retail stores abroad use “omnichannel” strategies to seamlessly integrate channels and let the customer decide when, where, and how to buy.

India is among the countries with the highest per capita availability of retail store space. According to, there are at least 11 retail shops for every 1,000 people in India, whereas the US has only four. The number of supermarkets increased from 500 in 2006 to 4,000 in 2011, and is estimated to touch 8,500 by 2016. But only about 3 percent of shops in India are in the organised sector, and only about 5 percent have an area of over 500 square feet.


In 2020, e-commerce will account for around 5 percent of the total Indian retail market. According to Pricewaterhouse-Coopers (PwC), e-commerce in India faces hurdles such as high service cost of cash-on-delivery (CoD) transactions (the most popular method), high rejection rate of goods sold under the CoD system, free shipping, low Internet use, and low use of e-commerce by those with Internet access. Online travel bookings comprise 70 percent of the e-commerce market, according to PwC.

However, the reach and ease of use of e-commerce may eventually win over customers. Amazon, Flipkart, and Snapdeal deliver to most areas covered under the 19,000 PIN codes. Amazon and Flipkart plan to invest $ 370 million in India. Paytm, MobiKwik, and the Lulu Group also have big plans.

Future prospects

As mentioned, India has slipped to the 15th position in the 2015 Global Retail Development Index, with countries including Uruguay, Brazil, Turkey, Indonesia, and Sri Lanka surpassing it. However, a KPMG report says this situation will change because of the expansion of organised retail to Tier-2 and Tier-3 cities, changes in demographics and customer habits, and increase in incomes.

The challenges for big investors are the FDI regulations, competition from the unorganised sector, diverse customer profiles, lack of infrastructure, high real-estate rates, and difficulty in hiring talent. But, with the global slowdown and the problems in China, India’s retail sector has become an attractive investment destination.

Besides, the government’s reforms to attract foreign direct investment (FDI) in the retail industry—a hotly debated issue—have also helped. The government has allowed 51 per cent FDI in multibrand retail and increased the FDI limit to 100 per cent (from 51 per cent) in single-brand retail. 

It is in talks with the states to adopt the Goods and Services Tax Bill, which is expected to improve the business climate in the country.

The Foreign Investment Promotion Board has cleared investment proposals worth $100 million, including those from Puma, Bestseller, and Flamingo, according to the India in Business portal of the central government.

According to the Indian Brand Equity Foundation, Walmart, Tesco, GAP, and JC Penney are increasing their sourcing from India. IKEA has entered into an agreement with the Telangana Government to open its first store in India in Hyderabad. Carrefour and Metro AG are the other foreign giants who have entered India.

With all this attention, the Indian consumer has excellent reasons to feel like a king or queen. Young professionals are earning good starting salaries and do not mind loosening their purse strings.

The philosophy of “You only live once” has killed the guilt that made the older generation pause before splurging on luxury goods. Indeed, many affluent customers have regular “shop till you drop” outings. However, the new Indian consumer also seeks value, and does not compromise on quality for the sake of low price.

Indian retail, therefore, presents opportunity but also challenges for global investors.

Jobs in Retail

Growth in the retail industry has increased the demand for skilled professionals. There is an almost constant search for supply chain and retail management professionals.

Among the positions frequently advertised are customer sales associate, department/floor/category manager, store manager, retail operations manager, retail buyers, merchandisers, communications manager, logistics manager, and back-end operations managers.

Besides professional acumen, communication skills and problem-solving capabilities are important for any job in the retail sector. Of course, a good, natural smile does help all the time. (For more, see the section on “Jobs” in the post on Consumer industry.)

Online resources

  1. Forbes
  2. India Retailing
  3. ET Retail

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