Retail Economy.pptx

Retail Growth and Economy  Retailing, one of the largest sectors in the global economy, is going through a transition phase not only in India but the world over. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban...

Retail Growth and Economy  Retailing, one of the largest sectors in the global economy, is going through a transition phase not only in India but the world over. For a long time, the corner grocery store was the only choice available to the consumer, especially in the urban areas. This is slowly giving way to international formats of retailing. The traditional food and grocery segment has seen the emergence of supermarkets/grocery chains (Food World, Nilgiris, Apna Bazaar), convenience stores (Convenio, HP Speedmart) and fast-food chains.  India is the country having the most unorganized retail market. Traditionally it is a family's livelihood, with their shop in the front and house at the back, while they run the retail business. More than 99% retailer's function in less than 500 square feet of shopping space. Purchasing power of Indian urban consumer is growing and branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages, Food and even Jewellery, are slowly becoming lifestyle products that are widely accepted by the urban Indian consumer. Indian retailers need to advantage of this growth and aiming to grow, diversify and introduce new formats have to pay more attention to the brand building process. The emphasis here is on retail as a brand rather than retailers selling brands.  GROWTH OF RETAIL SECTOR IN INDIA Retail and real estate are the two booming sectors of India in the present times. And if industry experts are to be believed, the prospects of both the sectors are mutually dependent on each other. Retail, one of India's largest industries, has presently emerged as one of the most dynamic and fast paced industries of our times with several players entering the market. Accounting for over 10 per cent of the countrys GDP and around eight per cent of the employment retailing in India is gradually inching its way toward becoming the next boom industry. As the contemporary retail sector in India is reflected in sprawling shopping centers, multiplex- malls and huge complexes offer shopping, entertainment and food all under one roof, the concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. This has also contributed to large-scale investments in the real estate sector with major national and global players investing in developing the infrastructure and construction of the retailing business. The trends that are driving the growth of the retail sector in India are Low share of organized retailing Falling real estate prices Increase in disposable income and customer aspiration Increase in expenditure for luxury items (CHART)  of the largest sectors in the economy. It contributes 10% to the GDP and 8% to the employment. The country's per capita retail store availability is also among the highest in the world. India's retail sector is experiencing exponential growth with retail development taking place not just in major cities and metros, but also in tier II Retail and and III cities. Healthy economic growth, Indian changing demographic profile, increasing disposable income, urbanization, changing Economy consumer tastes and preferences are some of the factors driving this growth. Increasing participation from foreign and private players has given a boost to Indian retail industry making India the fifth largest and preferred retail destination globally. India's price competitiveness also  Global retailers are increasing their sourcing from India and are moving from third-party buying offices to establishing their own wholly owned/wholly managed sourcing and buying offices in India. The Government of India has approved 51% FDI in multi-brand retail and 100% FDI in single-brand retail under the automatic route with plans to allow 100% FDI in e-co e-commerce. Cumulative FDI inflow in retail stood at US$.17 billion between April 2000 to June 2020. To provide a level playing field to stakeholders, the government is also planning to synchronize policies of retail, FMCG and e-commerce with a single policy framework.  In FY20, organized retail contributed about 11-12% of the overall retail industry. Online media also emerged both as a strong influencer as well as a buying channel. E-commerce accounted for nearly a third of several electronic categories, almost half of smartphones sold, and about a fifth of all apparel sales in India. Fashion, furniture, electronics, luxury retailers and automobiles were the hardest hit as consumers forewent discretionary purchases in favour of stocking up on food and household supplies. Retailers and manufacturers also faced supply chain bottlenecks because of disruption from Chinese vendors. In June 2020, local traders' body Confederation of All India Traders (CAIT) called for a boycott of over 450 categories (3000 items) of Chinese goods over continued border clashes between India and China.  The list released by CAIT broadly included everyday items, including FMCG products, consumer durables, toys, furnishing fabrics, textiles, builder hardware, footwear, apparel, kitchen items, handbags, cosmetics, electrical and electronics, fashion apparel, among others. Covid-19 also brought changes in the spending patterns of consumers along with some long- term lifestyle changes. In food staples, the major emerging trends were around the reduced need to 'touch and feel' products at the time of purchase and increase in focus on brand led quality assurance. Retail technology investments were made in order to continue  Increase in per capita income The which in turn increases the household consumption growth Demographical changes and factors of improvements in the standard of living the retail Change in patterns of consumption and availability of low-cost sector of consumer credit Improvements in infrastructure and Indian enhanced availability of retail economy: space Entry to various sources of financing  It can generate huge employment for the semi-skilled as well as illiterate population which otherwise can’t be employed in the already confined rural and organized sector. The retail sector is highly dependent on the rural sector. Thus it can facilitate the improvement of the standard of living of farmers by purchasing commodities at a reasonable cost. It also stems out an indirect employment generation channel by training and employing people in the transportation and distribution sectors such as drivers, mechanics etc. It is also evident that real estate is a genuine challenge for organized retailing. huge tax revenue generated from these retail biggies and collected in government coffers will gradually wipe out the ugly looking fiscal and revenue deficits Besides the transaction in foreign currencies by these MNCs will create a balance in exchange rate and will bring in stable funds in the economy as opposed to FII’s hot money. This will in turn act as a boost to the developing (or ‘transforming’, as suggested by the USAID) economy of India.  The Goods and Services Tax (GST) launched on 1st July 2017 in India has more or less impacted every major and minor business sector in the country. While some industries are seeing growth as a result of decreased taxes, some others are facing a decrease in sales because of increased taxes. GST brings Lower Taxes GST effectively replaces all the various indirect taxes being applied the to the supply of retail products. Before GST, retailers had to pay multiple taxes, including VAT, CST, service tax, excise duty, etc, following amounting to around 30% of the product cost. After GST, there is only a single tax, varying from 12 to 28% on different products. GST benefits to also reduces the cascading of taxes as the credit for input taxes can be now claimed by retailers. retailers The impact of GST on retail sector is going to be positive as it will bring down total indirect taxes, increase supply chain efficiency and and retail facilitate seamless input tax credit.... Vanishing state boundaries will reduce the complexity for retailers and increase the distribution reach as well as efficiency shoppers in Reduced Complications the country. The less number of taxes means less complexity. Also, GST is a completely digital tax system, that means retailers can plan and file the returns online without having to manage a lot of physical documents, accounts, etc. Retail is one of the major industries in India and also one of the largest in the world. The Indian retail industry is expected to reach 1.3 trillion USD by 2020 at a compound annual growth rate of 16.7%. GST is, as usual, applicable to almost every retail supply, affecting the cost for the end consumers CONCLUSION The retail sector has played a phenomenal role throughout the world in increasing productivity of consumer goods and services. RETAIL is the second largest industry in US in terms of numbers of employees and establishments. There is no denying the fact that most of the developed economies are very much relying on their retail sector as a locomotive of growth. The India Retail Industry is the largest among all the industries, accounting for over 10 per cent of the country's GDP and around 8 per cent of the employment. The Retail Industry in India has come forth as one of the most dynamic and fast paced industries with several players entering the market. But all of them have not yet tasted success because of the heavy initial investments that are required to break even with other companies and compete with them. The India Retail Industry is gradually inching its way towards becoming the next boom industry.  India's e-commerce market is expected to reach US$ 99 billion by 2024, growing at a CAGR of 27% over 2019. This will come on the back of faster speeds on reliable telecom networks, faster adoption of online services, variety of choice, convenience, etc. Future of Luxury retailing is also gaining importance in India. This includes fragrances, gourmet retailing, accessories and jewellery among many others. Retail There is also an upward trend seen in modern retailing driven by urbanization. There are more than 500 operational shopping malls in India having thousands of brands across food, fashion and lifestyle which are offering best of national and international brands to better educated consumers. One of the major areas supporting the retail growth in India is the e-commerce industry. As per the Indian Brand Equity Foundation, India is expected to become the world's fastest growing e-commerce market, driven by robust investment in the sector and rapid increase in the number of internet users.