Over the past decade, the Indian retail sector has proven to be the fastest growing industry. It has been characterized by being largely unorganized and highly under-exploited. However, due to the changing preferences of the urban Indian, organized retail has come into picture.
More than 90% of the retail sector consists of grocery stores, medical shops, and paan shops. They are mostly family run businesses. Despite its large presence it has not been able to cater the demands of the growing middle class. This has led to a shift towards organized sector in urban areas. Some of the key players in the organized sector are -AV Birla Group (more, Allen Solly, et al), Tata Group (Trent and Westside), Reliance (Fresh, Digitals, Trends, etc.), and Pantaloons (Big Bazaar and Central). Even then they represent only 2% of the total market.
The growth of organized sector may bring better services to the consumers. It will definitely create new employment opportunities and lead to infrastructure development. It can convert an area into a tourist destination and in turn boost the local economy.
The global economic slump had its effects on this sector too. All the big players had to slow and postpone their expansion plans. Subhiksha and Vishal Retail needed liquidity injection to bail them out of bankruptcy. As the economy started showing signs of recovery, a bit of confidence was restored.
The sector has attracted foreign players like Wal-Mart and Tesco. Taking this as an opportunity the government recently increased the FDI to 51%. But before its implementation we should perform an impact analysis on Indian SMEs. We should first give chance to Indian players to restructure themselves and then invite outsiders.
