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CARE Ratings expects retail industry to grow at 12-14% over next 3 years

Over the past two decades, the size, scope and complexity of retailing has undergone a considerable change.

August 08, 2019 / 07:39 PM IST

CARE Ratings expects the retail industry to register growth rate of about 12-14 percent over the next 3 years to $1,150 billion by 2021.

The credit ratings agency said in a note, "With factors such as higher demand from consumers with higher incomes, job creations, improved standard of living, brand awareness, higher discretionary spends and higher participation of producers/retailers in the organised retail market, discounted and promotional pricing, increased number of products and more private labels with retailers among others, the industry is expected to register growth going forward."

According to the company, private final consumption expenditure is expected to grow by 10-11 percent year-on-year until 2021, which has grown at about 10-12 percent historically. GDP is expected to go up to ~7.3 percent by FY21.

Over the past two decades, the size, scope and complexity of retailing has undergone a considerable change and the retail industry is split in two categories — organised and unorganised.

India's retail industry is one of the most dynamic and fast growing as several new players have entered the market apart from rising income levels, growing aspirations, favourable demographics and easy credit availability.

The retail sector contributes about 10 percent of the country's gross domestic product (GDP), around 8 percent of employment, and is valued at $792 billion as of 2018.

Globally, India is the fourth-largest global destination in the retail space after US, China and Japan.

The industry has witnessed a CAGR of over 10 percent during 2013-18, close to double the growth witnessed during 2008–13 period.

The Indian retail market continues to be dominated by unorganised retail (mom-and-pop stores and traditional kiranas) accounting for about 88 percent of the total retail market while organised retail market is valued at about $95 billion, which is only 12 percent of the sector.

E-tail stands at about $24 billion in India, accounting for about 25 percent of the organised market or 3 percent of the total retail market, CARE said.

India's organised retail penetration is much lower in comparison to countries as the US which has organised retail sector penetration of 85 percent.

Moneycontrol News
first published: Aug 8, 2019 07:39 pm

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