Economic growth

Improved Standard of Living

Increased Affluence

Information Explosion

Mass Awareness

Demographics

Urbanization

Credit availability

These positive macro trends are resulting in changing preferences in demand for lifestyle goods. Mindsets are shifting towards an organized retailing experience.

Another key driver for organized retail is the surge in mall growth. The number of malls is expected to rise to 600 by 2010.

India has 209 million households, of which, the 6 million classified as 'rich' have annual incomes of over USD 4700 and 75 million classified as 'consumers having annual incomes between USD 1000-4700. Over half of these 'rich' families live in Delhi, Mumbai and Bangalore, and spend around USD 18 billion annually. 62% of the market for premium products in India is also concentrated in these three cities. 85% of India's retail market is also concentrated in the country's 8 largest cities. An estimated 1 million households at the top of India's income map constitute the 'super-rich' in the country. Growing by 20% every year, this segment's buying behaviour is in line with its corresponding international segments.

While this segment is worth targeting for high-end premium products, it is not the key driver of the organized retail sector. The real driver of the Indian retail sector is the bottom 80% of the first layer and the upper half of the second layer of the income map. This segment of about 40 million households earns USD 4,000-10,000 per household and comprises salaried employees and self-employed professionals. This segment is expected to grow to 65 million households by 2010, and is currently the key driver behind explosive growth in passenger car sales and mobile phone penetration. To tap this growth opportunity, Indian retail organisations need to be prepared for a quick scale up across dimensions of people, processes and technology in addition to identifying the right formats and value proposition for the Indian consumer.

The Final Footage

Driven by strong fundamentals, the Indian retail sector is all set to narrate a very fascinating story in the next few years. The story will be characterized by radical changes, shattering of paradigms, large investments and few failures as well. This is notwithstanding the enormous set of challenges, complexities, and high degree of dispersion of the Indian retail opportunity, all of which of course, seem surmountable. The entire world would be a keen witness, and perhaps, a part of this story.

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Anuraag Mittal is B.Com. (Hons) & M.Com. (Specialization in Marketing) from Delhi University, PGDBM (Marketing & HRM) & M.Phil. (Management) from Bharati Vidyapeeth. Also done Ph.D. from CCS University, Meerut. He is currently working as Reader in Department of Management, Delhi Institute of Advanced Studies (DIAS). He is the co-author of the book titled, "Case Studies in Management".
Suchi Priya Mittal is B.Com. (Hons) & M.Com. from University of Delhi, and is currently persuing Ph.D. from Faculty of Management Studies (FMS), University of Delhi in the area of "Emotional Intelligence". She is also working as faculty in University of Delhi and is teaching Marketing, Advertising, Management & Economics.