Retail Industry In India | S-I-P

Reading Time: 5 minutes

Retail Industry In India

India is the fourth largest retailer destination in India after the US, China & Japan. India’s retail market is estimated at $822 billion in FY 2019-20 which is expected to grow at CAGR of 10% over next 5 years to reach $1.3 trillion by FY 2024-25.

However, out of $ 822 billion total value only 10% is hold by Organized retailer like reliance retail , Dmart etc which is expected to reach 25% by FY 2024-25 .i.e around $ 325 billion from $82.2 Billion.

India’s organized retail penetration is very low as compared to that of US which is around 85%.

Major Retail Segment

Food & Grocery (F&G) segment contributes around 65% of total organized retail industry however demand of apparel & footwear is growing at 40-45%.

However, normally in India Retail Industry is also bifurcated into “Value Retailing” & Life Style Retailing” because of large population & low GDP per capita.

‘Value Retailing’ caters to essential needs of the consumer. Value Retailing is a high-volume but low-margin business .

Life-style Retailing” is a high-margin and low-volume business and also fosters higher customer loyalty with relatively low substitutes.

“Value Retailing is relatively immune to economic downturns”.

Operational Format

Companies in retail segment operates the following type of stores

  • Departmental Stores
    • A retail shop with different area (department) of shop catering to different consumer needs.
    • Pantaloons, Westside , Shoppers Stock & Reliance Trend are departmental stores
  • Supermarkets/convenience stores
    • These are basically grocery stores which sells food items.
    • Reliance Fresh & Big Bazaar Grocery stores are such stores.
  • Hypermarkets
    • These type of stores are combination of Departmental stores & Supermarkets.
    • Spencer’s retail , HyperCITY , Big Bazaar are such stores.
  • Cash & Carry Stores
    • These are type stores in which goods are sold on either self-service basis or on sample basis from a wholesale warehouse.
    • Metro cash & carry is one such example. Reliance retail also operates cash & carry stores.
  • Specialty stores
    • These type of stores sale relatively narrow category of goods say , furniture , books, watches etc.
    • Titan, Vijay Sales , Croma & Ikea are such stores.
Also Read on FinMedium:  Understanding Bitcoin - Its a Bubble or an Asset for Investment

Retailers in India

There are handful of retailers in world’s fourth largest retail market.

Reliance retail is India’s largest retailer by reach, scale, revenue & profitability.

Following Companies are the largest Retail companies in India :-

  1. Reliance Retail (RR)
  2. Avenue Supermarkets
  3. Future Retail
  4. Aditya Birla Fashion & Retail
  5. Trent
  6. Shopper’s stop
  7. Spencer’s Retail
Reliance retail earned way more than the combined revenue of other listed peers.

As said above India retail is divided into “Value Retailing” & Life Style Retailing” which is evident from above why it is so .

Reliance is one the largest retail store operator.

DMART is conservative on opening of new stores hence they add few stores during the year and better earns money from old stores

Reliance have been able to best among peers on the area available with it .

The Way Forward

The organized retail is going to grow at CAGR of 25% by FY 2024-25 which is why this sector has one of the highest PE ratio’s.

Reliance Retail

This is one company which clearly understand what how and when it’s going to do its things. Reliance Retails majorly have Consumer Electronics based stores followed by Fash & Lifestyle (Trends) & grocery.

Since Grocery segment is predominatly controlled by the kiriana stores in India for which:-

It is establishing its Digital Commerce Platform to serve consumers in partnership with traditional retailers. Launched pilot phase of JioMart during the year.

In addition to above , it is also Providing omni-channel experience with flexibility of pick up and/or return from home/ nearest store , Connecting physical and digital spaces , going to be present across all key consumption baskets.


Avenue Supermarket

DMart wants to cater everyday needs of customers by providing good quality products at low prices. They are focusing on further improving their operations and make it more convenient for our customers to shop in their stores.

It follows a cluster-based expansion approach wherein they focus on deepening our penetration in the areas where they are already present, before expanding to newer regions.

The company is expected to follow the same strategy since it has worked for them.

Aditya Birla Fashion & Retail , Trent and Shoppers stop

Aditya Birla Fashion & Retail , Trent & Shoppers stop may face contraction due to COVID-19 blues and Focus of customers on Online Purchases.

However, to mitigate what is coming next Shoppers Stop have thought of new way forward :-

The future of retail will involve a combination of human and digital. The convenience of ordering online in a safe and secure environment of ‘your home’ and of setting up safe delivery systems will play equally important roles. Investments in Omni-channel capabilities will be accorded high priority. Online consultations will hold greater appeal, as customers will be able to connect with personal shoppers and stylists through simple video calls.

Spenser Retail

Spenser Retail has also now trying to be online for beating the blues :-

Also Read on FinMedium:  Bajaj Consumer Care Ltd – #DARKHORSESTOCK

The Company is in the business of organized retail, which majorly deals in essential products. During the lockdown, the ability of customers to reach the company’s stores was limited. In view of this, the Company launched alternative platforms to place orders, i.e, its online presence.

Read more on Ground work Add on.


The author doesn’t hold shares in any of the above company directly and have no intention of owing them in near future. However, since investing is a continuous process of research & investment it is possible that after some time any of the above or all of the above may become part of direct holdings of author..

Source link

Every Wednesday and Saturday, we send Info-Graphic and FinMedium Weekly Digest newsletters to our 25000+ Subscribers.

Join Them Now!

Stock Info Point

Stock Info Point

SIP focuses on providing investors with an abundance of information in a simple form which helps them understand nuances better.
Please Share :)