The Indian Retail industry is one of the top five retail industries in the world and has emerged as the most dynamic and fast-paced industry. It accounts for over 8 percent employment and around 10 percent of India’s GDP. The Indian Retail Market is expected to nearly double by 2020 from 2015. But there are some challenges the retail industry is facing in India.
A decade ago, the Indian consumer used to save most of his income and purchase the bare necessities. The Indian consumer was satisfied with only necessary requirements. There was no place for unnecessary needs and luxuries. But that time has gone. The Indian consumer has gone through a remarkable transformation. And now the consumer is armed with higher income, credit cards, desire to improve the standard of living and exposure to the shopping culture of the west. Multiple malls, supermarkets and organized retail with a variety of products are fueling the needs of the Indian Consumer.
India has a young population and it’s very large in number. The internet and television have made an impact on the mentality of young consumers. The generation is earning money at a very young age, and it is a lot, big thanks to BPO and other avenues of employment that cater to students in college and schools. As a result, they are ready to spend most of their income on apparel, electronics, and accessories.
A number of employment opportunities have emerged due to liberalization. Job prospects in the country are looking up because of the expansion of domestic corporations and entry of a number of multinationals. As a result, consumption and income are projected to increase quickly over the upcoming year that sets the stage for promising and exciting retail market in the future in the country.
Growing urbanization in the country is also responsible for the changing consumer mentality. The local population gets converted from net savers to the net spenders, as urbanization is spreading beyond the major cities which are consistent in the both developed countries like USA, UK and developing countries like Thailand and Malaysia.
No Money, No Problem
A huge expansion has been taken in the financial sector. Credit cards and short-term loans were difficult to access a decade ago. But the scenario is no longer the same. Short-term loans and credit cards have become easily accessible. Flexible financing options, credit card reward schemes and all other common lures are tempting the Indian consumer to shop. From a home to an automobile, the loans are freely available. The big-ticket items that were previously within the reach of consumer only after the years of saying are easier to buy.
Several international retailers are trying to invest in India to leverage the strong demand of Indian consumers. In the coming years will evolve as a mature and larger market, but to happen so, investors need to consider all the challenges which retail marketing is facing.