Emerging Retail - A Consumer Driven Approach

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Retailing in India (An overview)


In India, the retail sector is the second largest employer after agriculture. The retailing sector in India is highly fragmented and predominantly consists of small independent, owner-managed shops. There are some 12 million retail outlets in India. Besides, the country is also dotted with low-cost kiosks and pushcarts. In 2001, organized retail trade in India was worth Rs11, 228.7 billion.

There has been a boom in retail trade in India owing to a gradual increase in the disposable incomes of the middle class households. More and more players are coming into the retail business in India to introduce new formats like malls, supermarkets, discount stores, department stores and even changing the traditional looks of bookstores, chemist shops, and furnishing stores. There are no hypermarkets in the country as yet.

More so, a billion people in overall population leads to very large numbers. While the middle class may not be as big as expected, it could still add up to say the sizeable number.

Food sales constitute a high proportion of total retail sales. The share was 62.7% in 2001, worth approximately Rs7, 039.2 billion in 2001 while non-food sales were worth Rs4189.5 billion. However, the non-food retailing sector registered faster year-on-year growth than food sales.

Retail Infrastructure:

In 2001, there were an estimated 11.2 million retail outlets in the country. The concept of retailing chain stores is at a very nascent stage in India. Organized retailing, represent a small fraction of the Indian retail market. However, these modern formats are showing robust growth as several retail chains have established a base in metropolitan cities, especially in south India, and are spreading all over India at a rapid pace.

Total retail sales area in India was estimated at 328 million sq m in 2001, with an average selling space of 29.4 sq m per outlet. This trend towards larger outlets is leading to a rise in average retail space. However, space and rentals are proving to be the largest constraints to development of large formats in metropolitan cities, since retailers are aiming the prime locations.








The mid 1990s marked the arrival of new, well-endowed malls and shopping centers, which are spacious, airy and equipped with modern amenities. They have big label stores as well as in-house eateries and entertainment zones. Each mall typically has an anchor, which occupies a sizeable percentage of the total usable area. The anchor is expected to attract a variety of consumers and hence is the key to increasing foot traffic.


The number of large mega-malls is expected to increase significantly as India is now experiencing a “mall boom”. Shopping malls is set to one of the most visible faces of the Indian retail scene by the end of 2002. According to estimates apart from the metropolitan and larger cities, as many as 50 new malls will be coming up by 2005 in the smaller cities as well.