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India’s retail sector poised for mega growth by 2020

Indias retail sector poised for mega growth by 2020 002The Indian retail sector, boosted by rapid urbanisation and digitisation, rising disposable incomes and lifestyle changes - particularly of the middle-class is projected to grow from $672 billion in 2017 to $1.3 trillion by 2020. Over the last two decades the retail sector has evolved rapidly to large multi-format stores in malls offering a global experience, and on to the highly tech-driven e-commerce model. The organised retail market, growing at a CAGR of 20-25 per cent annually, is estimated to increase by 19 per cent across the top seven cities by 2020.

Investments fuel growth

The government’s decision to allow 51 per cent FDI in multi-brand retail and 100 per cent FDI inIndias retail sector poised for mega growth by 2020 001 single-brand retail under the automatic route attracted giants like Walmart to foray into India. The introduction of the Goods and Service Tax (GST) as a single unified tax system in July 2017 and the government’s move to provide a single-policy framework for retail, FMCG and e-commerce are some other growth boosters.

Stats reveal, India’s retail sector attracted investments worth $147.40 million in FY18, growing at 35 per cent year-on-year from $104.34 million in FY17. Considering future trends of Indian retail real estate, investors are showing confidence by making high value long-term commitments in the sector. The steady rise of PE investment has propelled mall developers to re-vamp and re-evaluate their portfolio by including factors like product-mix, catchment and customer experience at the centre of their business strategies for malls.

Multi and Omni channel strategies redefine retail

Rapid digitisation, smartphone revolution and e-commerce have changed the face of retail in India. The result is the growing popularity of multi-channel and omni-channel strategies that are redefining retail experience. Moreover, ‘experiential’ retailing has taken precedence in the brick-and-mortar format. Besides infrastructure, amenities, catchment area and varied tenant mix, the key factor determining the success of malls is its ability to offer shoppers an ‘experience’ which will ultimately bring them back.

Meanwhile, demand for high-quality shopping experiences is spreading its wings to Tier II, III cities with mushrooming malls. The market is now shifting to offer retail real estate that meets global standards and conform to the needs of global brands and investors. Malls are no longer mere shopping destinations. Top-performing malls are mixed-use businesses that incorporate social entertainment options, provide a unique appeal along with a certain depth in shopping experience. Additionally, the ability to anticipate changing consumer needs and adapt accordingly makes malls successful today.

Mobile retail to reach 37.36 per cent by 2021

Recent market research indicates, mobile-phone internet user penetration in India will reach 37.36 per cent of the total population by 2021. Additionally, overall internet audiences are estimated to surpass 635 million online users by 2021, paving the way for increases in online shopping. As per estimates, online retail is projected to grow to $73 billion by 2022, growing at a CAGR of 29.2 per cent. In fact, e-commerce in India is growing faster than in other countries like Australia, Japan, China and South Korea.

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