Despite prolonged slowdown in economy, Indian retailers such as Future Retail, Shoppers Stop, Reliance Retail are showing marked improvement in their same store sales growth.
Same store sales growth (SSG) means the growth coming from stores which are in the business for a year or more and not for opening new stores. It is key indicator of a retailer’s performance.
Retailers, airlines, consumer durables and companies are pulling out all stops to woo customers this Independence Day weekend. For companies, it could be a desperate attempt to boost their sales during the slowdown, but for shoppers, it could be a bonanza time.
Indian retailers, which expanded rapidly during boom years, are shutting unviable stores and moving cautiously on expansion as the economic slowdown prolongs and more pronounced.
Future Group's Big Bazaar, the country's largest hypermarket chain, has shut or relocated five stores since January and opened two new ones. The total number of its stores stands at 163 currently, with a net addition of two stores since December 2012.
The group had shut 10 unviable Big Bazaars last year and opened 18-20 new ones.
The Indian retail market is poised to touch USD1.3 trillion by 2020 and the industry has the responsibility to provide quality goods and services at affordable prices, Consumer Affairs Minister K V Thomas said on Wednesday.
The consumer behaviour is also experiencing a transition with trends like online shopping, he said at an event organised by FICCI. With consumer awareness improving dumping of cheap goods from neighbouring countries is slowing down, he added.
Despite inflationary atmosphere and economic meltdown, India's major apparel retailers like Shoppers Stop, Arvind Ltd and Promart have pegged a healthy like-to-like growth in the range of 12-15 percent for the first quarter ended 30 June 2013. Like-to-like growth is the increase in sales from same store in comparative quarters.
According to industry experts, reasons for the considerable growth amidst slowdown include a stable maximum retail price (MRP) to increase in promotional schemes by apparel retailers.
The Indian government on Thursday approved the much-awaited relaxation of the foreign direct investment (FDI) policy on multi-brand retail trading, by easing the three main contentious riders on such money.
These three, added as conditions to last year's decision to open FDI in this segment, were on a mandatory 30 percent sourcing from small domestic industries, 50 percent of the investment to be in back-end infrastructure and outlets to be opened only in cities with population of more than a million.
India could ease its policy on foreign investment in the multibrand retail sector, as the country has yet to receive any firm proposals from overseas supermarkets about 10 months after it allowed them to set up operations.
The Department of Industrial Policy and Promotion, which is part of the Trade Ministry, has proposed several changes to the policy to attract investors in the sector. India lifted a ban on foreign investment in supermarkets in September, allowing foreign companies to own as much as 51 percent of local joint ventures.
India may need franchising set-ups valued at USD36 billion by 2017 but the segment could be hurt by the government's recent move to allow foreign retailers to open only company-owned and operated multi-brand stores, says a KPMG report.
"Recent clarifications issued by the Indian government on FDI regulations in multi-brand retail allowing foreign retailers to open only company-owned and company-operated outlets could be a big blow to growth in retail franchising in India," said KMPG's report on Franchising Industry in India 2013.
India slipped to the 14th position on the Global Retail Development Index for 2013, while three Latin American economies – Brazil, Chile and Uruguay – topped the list. Brazil was on the top for the third consecutive time, according to a report by AT Kearney, a global consulting firm. India had occupied the fifth position in the report last year and was referred to as "on the radar" or highly favourable destination.
There's no rush by global retail chains to invest in India, it appears from recent developments.
Those that had waited for years to open stores there are not in a hurry to file their application, while those watching from outside are hesitant to make a move. In a telling signal, at least six major foreign retailers failed to turn up at a meeting on multi-brand policy called by Commerce and Industry Minister Anand Sharma on Thursday, it is learnt.