Organised Retail in India- What will happen in 2010?

To say that the Indian market is hotting up would be an understatement. Every player has grand plans and it will be interesting to see the winners and losers. But the retail industry is generally a safe industry to be in. Amongst the leading 480 retailers in the world,94% made a profit in 2005.The average net profit margins were 4.2%(for the entire sample) and 4.5% for the profitable retailers. This gives hope for the Indian industry. But the real dampener today could be the astronomical realty rates. On the plus side again, retail, unlike product companies, is a tried and tested model and one could be profitable by adapting the elements of the model to the market.

But who is looking at what in the next five years?

Reliance, the big brother, is eyeing 100mn sq ft of space(Wal Mart had 490 mn sq ft in 2004) with 68 distribution centres and presence in 784 cities and 1600 small towns by 2011.The turnover - an eye popping 1,00,000 crores ($22.3 bn)!

Spencer’s has plans of 2000 stores and 6 mn sq ft of space by 2009.

Big Bazaar and Food Bazaar are looking at having 11.5mn sq ft of space and sales of Rs. 10,900 cr by 2010.

The other big ones like Bharti- WalMart and the Aditya Birla group follow a different PR strategy and are generally keeping their plans under wraps.

Subhiksha is another player which has grown rapidly and has the capability to scale up significantly.

There are other domestic emerging players like the Wadhawan group which have announced their aggressive intent through acquisitions.

Then there are Tesco and Carrefour closely eyeing the market.

However, the Indian market is big and has the capacity to accommodate about ten players with upwards of $2bn turnover(next four years) and some regional players. But the winner will be the ones who understand the customers and get their supply chain and people equations right.

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