Fascinated by retail. Avid follower of Retail news. Keen observer as a customer.

(IMP: All comments and opinions voiced in this blog are purely based on my understanding of things. I do not intend promote or defame any particular brand/company.)

Thursday, October 14, 2010

FDI Multi Brand Retail - Sneak peek

Retail is predicted to be the next Boom sector in India after IT. It came changed the face of India and now retail is going to do just the same. The Indian customer is going to shop like never before and I as a normal MBA student foresee a lot of change in consumer behaviour in Retail with the FDI expanding its footprint in Indian Retail sector.

Retail Industry India –Quick Facts
  • Retail accounts for 35% of the our GDP (Gross Domestic Product)
  •  Indian Retail ranked in the top 1-3 of GRDI (Global Retail Development Index) for the past 5 years
  •  Retail Industry accounts for around 8% of the country’s employment.
  •  Market size: US $312 Billion

Why the debate over FDI?
There is debate over FDI in retail sector (Multi-brand retail) primarily because Indian Govt. wants to protect the huge chunk of unorganized players (kirana stores/ mom & pop stores ). The negatives they foresee are:
  •  Low prices and high variety killing the business of local players
  •  High power of global companies to influence prices
  •  Suppliers’ margins could shrink considering bulk purchases from the manufacturing company   directly
  •   Lopsided growth in cities- FDI Retail will focus only on target markets and leave out the towns
The positives would be:

  • The establishment of a DREAM Supply Chain- which will improve the efficiency of Indian retailers as well
  • An opportunity for Indian manufacturers to reach global markets
  • Indian consumer with growing disposable income has now more variety to choose from while deciding how to spend it
  •  A Joint Venture would be  mutually beneficial for Indian as well as Foreign Investor
 My Supposition: Save money for next few years and then shop like never before. FDI will be a very good move for the consumer as well as the economy.



1 comments:

bloggi March 4, 2011 at 2:11 AM  

But FDI in retail is a two-edged sword. On one hand, it has the potential to generate jobs, get producers and consumers value for money and all that you have written, on the other it can displace millions from the low-cost entrepreneurship they are engaged in. Believe me, in their own way, the small traders, especially the little all-in-one shops, are more efficient than any MNC can ever be.

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