ORGANIZED RETAIL IN INDIA POISED TO REACH Rs.2000 BILLION MARK. EMPLOYMENT GENERATION FOR 12 MILLION PEOPLE

COMMERCE & INDUSTRY MINSITER KAMAL NATH RELEASES INDIA RETAIL REPORT 2007; LAUNCHES INDIARETAILING.COM

New Delhi, 9 th January 2007, Organised retail in India has the potential to add over Rs 2,00,000 crore ($45 billion) business by the Year 2010 generating employment for some 2.5 million people in various retail operations and over 10 million additional workforce in retail support activities including contract production & processing, supply chain & logistics, retail real estate development & management etc., said Mr. Kamal Nath, Commerce & Industry Minister releasing the IMAGES India Retail Report 2007 at a high powered industry and media meet at Udyog Bhawan today.

After leading the IT bandwagon, India is poised to grow as a Retail hub. It is imperative to sustain the modernization of the retail sector and dispel the myth that the game is big Vs small or traditional Vs modern or organized Vs unorganized or local Vs foreign . What is needed is to create an appropriate environment to propel retail where all benefit, he said.

India's huge population, he said, has the potential for mammoth consumption if given the power of spending and that is only possible through large scale development generating employment which is already happening with retail as the driving force.

Talking about the key challenge areas for the retail growth Mr. Nath expressed concern over escalating real estate cost, scarcity of skilled workforce and structured supply of merchandise which he assured would be tacked in co-operation with the retail industry and the support organizations.

Revealing key figures from the India Retail Report 2007, Amitabh Taneja, Chief Convenor of India Retail Forum said that the organised sector accounted for Rs. 55,000 crore ($12.4 billion) business at current prices in the calendar year 2006 increasing its share to 4.6% of the total Indian Retail Value that stood at Rs. 12,00,000 crore ($270 billion). Moving forward, organized retailing is projected to grow at the rate of about 37 per cent in 2007 and 42 per cent in 2008.

“Going by the current growth trend and considering the fact that existing prominent players in organised retail have stepped up their expansion drive with Reliance announcing big plans and other Indian corporate houses too evincing keenness on investing heavily in this sector as also the inking of the joint-venture between the world's largest retailer Wal-Mart and Bharti – The organised retail in India has indeed gained top speed and is now on the verge of take-off, Taneja added.

According to IMAGES India Retail Report 2007, of the Rs.12,00,000 crore retail market, food & grocery retail is by far the single largest block estimated to be worth a whopping Rs.7,43,900 crore, but more than 99 per cent of this market is dominated by the neighbourhood kirana stores.

Deliberating on the advantages of the organized retail, Mr Nath talked about the increasing efficiencies in the agricultural sector by removing intermediaries in the food supply chain. While urban customers benefit from reduced prices of farm sector goods, rural farmers benefit by way of higher returns for their produce.

With several States allowing retailers direct access to farm produce, there is a new revolution taking shape in rural India. Farmers are cultivating crops as per specifications and requirements of retail companies such as Reliance, ITC, Godrej and many others. More than 2,000 small farmers, for instance, are benefiting from such arrangements in Andhra Pradesh, he said.

Talking about the global perception about India, about its economic might and potential in terms of market size, Mr. Kamal Nath said that there had been a drastic change over the last few years. While the buoyant manufacturing and services sectors had contributed in fuelling consumption demand in urban as well as rural areas, the government on its part remained committed to improving infrastructure and providing a congenial environment for indigenous business modules to blossom and harness domestic as well as foreign investment to optimum levels. Economic prosperity also meant higher standards of living and higher consumption levels, and only an efficient and organised Retail sector could ensure and sustain this growing demand of the evolved consumer.

“But unlike the experiences in most other countries, growth of Indian retail is not going to be a staggered and time-taking process: India has already shown the world how quick it can adapt to hi-tech products and services and will again set a record of sorts in setting up world class retail formats across the country in record time. In the next five years India should have retail entities strong enough to compete with the best in the world”, added Mr. Nath.

At present, he said, India's retail sector is largely unorganized, with about 15 million tiny outlets catering to consumer needs across the country – it employs the second-largest number of people after agriculture. Organised retail is now focused primarily on the 300 million urban "middle classes'' and an additional 200 million rural rich, who form a consumer market worth more than US$100 billion. So, there is enough ground for the modern and the traditional formats to co-exist.

Narrating India's economic growth story Mr. Nath highlighted three important things:

One - that here is a society in which the fruits of development are more evenly spread, in which democracy is more real and palpable to the mass of the population, which makes for a stable social environment that is attractive and reassuring;

Two - that India is an enormous market, of which you are seeing only the tip of the iceberg;

And Three - the tremendous resilience of India: we survived the zooming oil prices, the fluctuating dollar and global recession, with barely a hiccup.

The Indian economy is integrating with the world, and yet it simultaneously has its own dynamics, which cushion global shocks as in no other country. India had kept the retail sector largely closed to outsiders to safeguard the livelihood of nearly 15 million small storeowners and only allows 51 per cent foreign investment in single-brand retail with prior government permission. FDI is also allowed in the wholesale business. Single-brand retailers such as Louis Vuitton, Fendi, LLadro, Nike and Toyota can operate now on their own. Metro is already operating through the cash-and-carry wholesale mode.

The issue of Foreign Direct Investment (FDI) has been debated time and again as the Indian Government has been under pressure to open up further. The policy makers continue to explore areas where FDI can be invited without hurting the interest of local retail community. Mr. Kamal Nath confirmed that the Government is considering opening up of the retail trading for select sectors such as electronic goods, stationery, sports goods, and building equipment.

“To understand the reasoning and implications of such moves it was vital to size up the entire retail market in various segments and consumption levels across product categories with share of the organized segment and it was just the right time for India Retail Forum to take the initiative of researching the scope of retail businesses in India”, said R S Roy, Editorial Director, Images India Retail report 2007.

Mr. Nath commended the pioneering efforts of the Images Group and India Retail Forum in compiling and pooling together relevant yet highly scattered and difficult to get information on this vital sector, which helps investors get a better understanding of the unfolding scenario. India Retail Report 2007 will set benchmark figures on consumer spend, retail market size across key categories and segments with scope and also performance of key players and their expansion plans.

In his address Dr. Ajay K Dua, Secretary, Department of Industrial Policy & promotion, Ministry of Commerce & Industry said, “The growth of the Indian economy is now manifesting itself in the growing purchasing power of its citizens. A ten to twelve per cent increase in the economy's disposable income and a much higher one in urban areas is also reflecting itself in the way goods and services are bought and sold”.

“There would be a real revolution in the Indian retail industry, if the changes being witnessed in the metropolitan and other tier-one towns percolates to all the 784 urban settlements, with populations above 50,000 persons. This is likely to happen as the real estate prices in the large metropolitan towns are increasingly becoming prohibitive and consequently giving distinct advantage to those who are already in the business of retailing, viz., the traditional mom & pop stores. Rural and semi-urban incomes are also expectedly to grow much faster in future, once the agriculture growth rate pushes up. Our civic laws concerning construction and property development also need to be re-looked, as the earlier convenience-stores get replaced by shopping malls and other formats of organized retail trade”, he added.

Expressing concern over the consumption and mall development trend, Editorial Director of this mega research of India retail research, R S Roy called upon the entire retail fraternity, concerned Govt. departments and the supporting organizations to work towards giving Indian retail - a face of India. “ India Brand Story can travel across the globe with 'Delhi Hat' type shopping cum entertainment centres opening not only across India but all over the world. Public private partnership can revitalise the formats like Khadi Bhawans that runs one of the largest retail networks in the world, and also govt. state run emporia,” he said.

As India emerges as one of the most potential markets for global brands and retailers and retail reinvents the way modern Indians celebrate their spending power, India that takes pride in its rich culture, heritage, art, craft and variety of wares must capitalize on this ever escalating consumerism and channelise the spending towards healthy consumption for overall development of the country.

Initiated by India Retail Forum and Images F&R Research, world's some of the top global research & consulting firms like AT Kearney, Ernst & Young, PWC, Technopak, KPMG, ICICI, AC Nielsen-ORG Marg, Synovate, Cushman & Wakefield etc. contributed for the India Retail Report 2007 research.

IMAGES India Retail report 2007 sizes up the entire retail market in various segments and consumption levels across product categories with share of the organized segment . Profiling formats and retailers therein, the study, full of facts and figures, is expected to reveal many interesting facets of the Indian retail industry that could open up newer avenues of business both for the established players and the new comers as well.

A truly international presentation in a coffee table format, the IMAGES India Retail Report 2007 also carries visionary thoughts of Shri Kamal Nath, Dr. Ajay K Dua, and over 40 thought leaders from the retail industry covering almost every aspect of retail business.

The occasion also saw the launch of a path breaking retail information interface portal Indiaretailing.com by Mr. Kamal Nath.

“Indiaretailing.com has an ambitious philosophy personified by these words: “The Home Page of the Indian Retailing Industry”. Indiaretailing.com is being designed to be just that – with a 24/7 update and news feed team that gets you the retail intelligence that affects your business in every way,” said Pallav Moitra, Head of this revolutionary concept.

“In the evolution of Indian retail in-time information will be vital to keep the industry and all its stakeholders abreast of the developments across. This exceptional portal is also aimed at the retailing community around the globe, giving a wide angle view and analysis of the business of Retail in India. Alongside interactive features such as interviews, chats and business development tools, it will also contain exclusive and investigative editorial content that we can promise, no other media has access to”, he added.

Besides retail news feeds, indiaretailing.com will boast an exclusive database of retailers, retail real estate developers, retail technology and systems firms, retail finance outfits, store design and shopfit pros, human resource sourcing and jobsite management, exclusive video interviews, live coverage of retail events and many more.

The portal is expected to have around 200000 page views in the very first month of operation and is strongly geared up to enjoy a very high and filtered subscriber number. To begin with the subscription number for daily News Letters is expected to reach over 25000 key people in the retail industry.

For details contact :

R S Roy
India Retail Forum
IMAGES Secretariat
S 21 Okhla Industrial Area Phase II
New Delhi - 110 020 India
Direct Ph : 011-40525027
Board : 011-40525000 Extn. 303
Fax : 011-40525001
Cell : +91 9811070053
URL : www.imagesfashion.com ; www.imagesretail.com

To order copies of the India Retail Report pl send payment (Delivery within India - Rs. 2,500/- Delivery outside India US$ 100/- Cost includes courier charges) in favour of Images Multimedia Pvt. Ltd. payable at Delhi at the address above. Copies of the Report will also be available with leading book stores like Crossword, Landmark, Odyssey, Oxford etc. from 15th January 2007.

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