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Executive Summary

The retailing industry in India estimated at Rs 930,000 crore (2003-04) is expected to grow at 5% p.a. In line with predictions made in 2002, organised retailing is well on its way to become a Rs 35,000 crore market by 2005. The size of organised retailing market stands at RS 28,000 crore in 2004, thereby, making up a mere 3% of the total retailing market.
Moving forward, organised retailing is projected to grow at the rate of 25-30% p.a. and is estimated to reach over an astounding Rs 100,000 crore by 2010. Its contribution to total retailing sales is likely to rise to 9% by the end of the decade.

In this scenario of feverish activity, this paper aims to map the global scene to the Indian retail Industry. It looks at the factors that have been fuelling this boom so far and what will drive the growth of the industry in the future. Urban India represents only a fraction of the opportunity that the retail sector can hope to exploit. Significant portion of future growth has to come from the rural market. This paper takes a look at the modern retailing formats being experimented with, both in the cities and the countryside and highlights how they are different from one another.

To fully harness the potential benefits that a huge leap in retail can offer to all its stakeholders in India, the roadblocks in its way have to be removed. This paper analyses the issues that currently impede the realisation of the maximum progress possible. It also tries to come up with recommendations that, if implemented, can provide a fillip to the current growth rate of the industry and truly make the Indian Retail Revolution a success story that the world will have to sit up and take notice of.

1. Introduction

Retailing is the final step in the distribution of merchandise - the last link in the Supply Chain - connecting the bulk producers of commodities to the final consumers. It covers diverse products such as food, apparels, consumer goods, financial services and leisure.

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* Contributed by -
Harmesh Mehrotra & Manu Arora,
MBA (IB) 2004-2006,
School of International Business,
Indian Institute of Foreign Trade, New Delhi.