Chennai: Indian retail industry will grow in the region of 12-14 per cent over the next three years to reach $1,150 billion by 2021, said a report.
“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,” Care Ratings said in its recent report.
According to the credit ratings agency, the country’s gross domestic product (GDP) is expected to go up to 7.3 per cent by FY21. Private final consumption expenditure is expected to grow by 10-11 per cent year-on-year until 2021, which has grown at about 10-12 per cent historically, it said.
The retail sector contributes around 10 per cent of the GDP, around eight per cent of employment and is valued at $792 billion as of 2018, state reports.
Care ratings said, “The retailers’ margins are expected to remain under pressure in FY20. In terms of net sales, we do not expect any significant growth during the year.” The slowdown in consumer demand has taken a toll over retailers margins, it added.
According to the report, India is the fourth-largest global destination in the retail space after US, China and Japan. The industry has witnessed a compound annual growth rate (CAGR) of over 10 per cent during 2013-18, close to double the growth witnessed during 2008-13 period.
E-tail stands at about $24 billion in India, accounting for about 25 per cent of the organised market or three per cent of the total retail market, CARE said, adding that India’s organised retail penetration is much lower in comparison to countries as the US which has organised retail sector penetration of 85 per cent.