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BMI India Retail Report Q1 2010
Business Monitor International, Nov 2009, Pages: 62
The BMI India Retail Report provides industry professionals and strategists, corporate analysts, retail associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on India's retail industry.
The Q110 BMI India Retail Report forecasts that total retail sales will grow from an estimated US$427bn in 2009 to US$798bn by 2014. Strong underlying economic growth, population expansion, the increasing wealth of individuals and the rapid construction of organised retail infrastructure are key factors behind the forecast growth.
As well as an ever-expanding middle and upper class consumer base, there will also be opportunities in India’s tier II and tier III cities. The greater availability of personal credit and a growing vehicle population that provides improved mobility also contribute to a trend towards annual retail sales growth of 16% in US dollar terms.
India’s nominal GDP was an estimated US$1.17trn in 2009. Average annual GDP growth of 6.7% is predicted by BMI through to 2014. With the population expected to increase from an estimated 1.17bn in 2009 to 1.25bn by 2014, GDP per capita is forecast to expand by nearly 79% by the end of the forecast period, to reach US$1,791. Our forecast for consumer spending per capita is for an increase from US$701 in 2009 to US$1,225 in 2014.
The growth in the overall retail market will be driven, in large part, by the explosion in the organised retail market. By this, we mean the Western concept of chain outlets, department stores, supermarkets, etc. According to Investment Commission of India (ICI) data, this segment accounted for US$12.10bn of sales in 2006, 4.6% of the total retail segment. BMI forecasts that organised retail sales will reach US$99.09bn by 2014, 12.4% of the total.
A second factor is the success that local firms have had in developing the modern concept. Domestic retailers such as Reliance Retail and Pantaloon Retail continue to invest heavily in growing their store networks and improving their in-store offerings, and the impact they have on growth will be boosted by the arrival of expansion-oriented multinationals.
Mass grocery retail (MGR) sales in India are forecast to undergo enormous growth over the forecast period. BMI predicts that sales through MGR outlets will increase by 155% to reach US$11.61bn in 2014. This is a consequence of India’s dramatic, rapid shift from independently owned small-scale retailers to large, modern outlets – although it must also be noted that this growth is forecast to come from a very low starting point.
BMI data put consumer electronic sales at US$25.17bn in 2009, with the automotive sector worth an estimated US$20.47bn and over-the-counter (OTC) pharmaceutical sales standing at US$2.20bn. The latter is predicted to be the fastest growing sub-sector over the forecast period, albeit from a low base, with BMI estimating that sales will reach US$4.57bn by 2014, an increase of 107.8%.
Retail sales for the BMI universe of Asian countries in 2009 were an estimated US$2.26trn. China and India alone in 2009 accounted for more than 93% of regional retail sales, and by 2014 their share of the regional market is still expected to exceed 91%. Growth in regional retail sales for the period 2009 to 2014 is put by BMI at 79%, or an annual average 12%. The Philippines should experience the most rapid rate of growth, followed by Malaysia. For India, the estimated 2009 market share of 18.9% is expected to increase to 19.7% by 2014.
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