Sales growth for fast-moving consumer goods (FMCG) companies is likely to remain muted in the September quarter, as consumers remain unwilling to increase spending.
The decision of Bharti Enterprises and Walmart to go their separate ways in India may suggest that having a foreign partner in a retail venture isn’t a sure-fire recipe for success. But the stocks of most listed retail companies have not reacted to this development.
FDI in retail is an emotional topic as people predict the death of the small retailer in India. This is unlikely. Large retailers such as Walmart, Tesco, Ikea, Reliance, Spencer's and Big Bazaar will co-exist with small retailers in India. How is this possible?
Distribution is the backbone of Indian marketing. India has 14 million retail outlets for a USD1.9 trillion economy, China has three million outlets for a USD8.7 trillion economy, and the US has one million outlets for a USD16 trillion economy.
Global e-commerce majors such as Amazon and e-Bay that have been eyeing the Indian e-retail market may soon have reason to cheer. The Industry Department is working on a draft foreign direct investment (FDI) policy on e-commerce, which includes e-retail. It is also holding consultations with industry and experts.
Buoyed by growth in modern retail and alternate channels like e-retail and home-shopping, the retail sector is projected to grow at a compounded annual growth rate of 6 percent to touch USD865 billion by 2023, says a study by consulting firm Technopak.
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.