Wednesday, April 23, 2008

Top 8 Cities To Get $15 B Investment In Retail

Despite the international slowdown in consumer confidence levels, the retail business in Indian cities is set to continue on its growth trajectory, according to an industry survey.

A recent survey conducted by retail consultant Technopak suggests that the country's top eight cities, including Ahmedabad, will attract an investment of $15 billion over the next five years.

This figure is set to grow further, if investments in malls and other ancillary industries are taken into account.

"The retail sector in India is pegged to attract at least $30 billion over the next five years. Half of this will be diverted to the top eight cities," associate vice-president of Tecknopak Research, Purnendu Kumar, said. "This will include both foreign direct investments (FDI) and investments from domestic majors such as Reliance, Aditya Birla Group and the Future Group," he added.

The survey slots Mumbai, Chennai, Delhi, Hyderabad, Bangalore, Pune, Ahmedabad and Kolkata among the select eight. "Of these, Mumbai, Chennai and Delhi will receive the lion's share, accounting for about 30%, or $9 billion, of the total investments," Kumar said.

According to Technopak, these eight cities currently account for more than 90% of the organised retail market in India. The country's total organised retail market India is estimated at around $15 billion, and is expected to grow at the compounded rate of 30% annually, assuming that the total retail growth remains less than 10%.

The consultancy firm says growth in the sector can further be accelerated if the government opens its doors to the multi-brands market. "In India, foreign players can only enter the cash and carry market, which is not enough to attract foreign investments into the country," Kumar said.

While the top cities will continue to lead the market over the next few years, tier II cities and other growth centres are expected to join the fray, accounting for about 40% of investments. Rural areas are seen receiving nearly $3billion in investments by 2012.

According to international consultant Jones Lang LaSalle Meghraj (JLLM), the country's retail sector is expected to grow by 35% by 2010, driven by a strong economy, favourable demographics, rising wealth levels, changing lifestyles and rising consumer aspirations. The growth is also expected to spill over to smaller cities.

"There is still a dearth of retailers in tier II and tier III cities. It costs less to establish an enterprise in these cities, and retail players can cash in on the high aspiration for brands from the metros, as well," Shubhranshu Pani, JLLM's managing director for retail, said.

1 comment:

Unknown said...

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