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India’s growth trajectory attracts foreign retailers as top brands rush to enter the market

Business Tuesday 21/May/2024 15:15 PM
By: Agencies
India’s growth trajectory attracts foreign retailers as top brands rush to enter the market

New Delhi: India currently has the fourth largest retail market in the world, and the country’s retail market has undergone a major transformation to record tremendous growth in the last 10 years. This sector continues to be a significant force in the domestic and global context.

According to a report by the Boston Consulting Group (BCG) and the Retailers Association of India (RAI), India’s retail market is up from $820 billion in 2023 and it is poised for transformative growth, with projections indicating a leap to an impressive $2 trillion within the next decade.

As per reports, India’s retail market is expected to reach $1.1 trillion by 2027 and $2 trillion by 2032 growing at 25 percent CAGR (compound annual growth rate).

To become a part of India’s retail growth curve, multiple global brands are entering India with Reliance Brands Ltd., the retail arm for high-end labels, by 2025.

According to reports, following the successful introduction of beauty retailer Sephora to India in 2023, Reliance Retail, led by Mukesh Ambani’s daughter Isha Ambani, is set to launch six global retail brands in India — Old Navy, Armani Cafe, Asos, Shein, EL&N Café, and Sandro and Maje.

Reliance’s efforts to bring more global brands to India have been bolstered by the opening of Reliance Industries Ltd-owned Jio World Plaza, the country’s largest luxury mall located in Mumbai’s commercial district of Bandra Kurla Complex, as reported by India Weaving Destiny.

Experts opined that India is attracting global consumer brands due to the country’s young population and rising disposable income.

British multinational professional services network Deloitte estimates that India would be the third-largest consumer market by 2030 after the United States and China, mentioning that the expected addition of 110 million middle-income households and 14 million high-income households will fuel retail spends in the country.

The retail sector is a major contributor to India’s gross domestic product (GDP) and employment as it accounts for more than 10 percent of the country’s GDP and employs approximately eight percent of the population, as per reports.

According to Deloitte India’s report titled “Future of Retail”, online retail penetration is projected to grow at an extraordinary rate, outpacing offline retail by 2.5 times in the next decade.

The report foresees the online retail sector, which stood at US$70 billion in 2022, to surge to US$325 billion by 2030.

Deloitte India’s report attributes these projections to the rapid growth of e-commerce in tier-2 and tier-3 cities, which have surpassed tier-1 markets in terms of total orders.

India is increasingly becoming an aspirational destination for global retail investors as a wide range of foreign brands are active in the country’s market, across the consumer spectrum.

India is attracting a slew of international brands from across the globe as the country has become a hotbed for foreign retail firms over the past few years and the growing interest that the global brands have shown in entering this market is obvious.

According to McKinsey FashionScope, India is expected to welcome hundreds of global brands in the next few years.

As per a report by Rediff published in April, around 25 international retail brands selling lifestyle and luxury products are likely to enter India in 2024.

According to Rediff, three such global retail brands entered India in 2021 and 11 did so in 2022, while some 24 international brands are estimated to have entered the Indian market in the last year (2023).

The portal reported, quoting AnarockRetail’s CEO and managing director Anuj Kejriwal, that global retail companies are coming to India for its middle class population.

“The spending power of urban Indian consumers is rising, and branded products in categories like apparel, cosmetics, footwear, watches, beverages, cuisine, and even jewellery are progressively becoming popular for use in business and leisure,” Anuj Kejriwal was quoted as saying by the portal.

Experts said India’s economic growth and its “openness to global trends” are two major factors drawing foreign brands.

Meanwhile, an NDTV Profit report, citing franchising solutions firm Franchise India Holdings Ltd., said that a swarm of global retail brands are queuing up to open outlets in India as at least 160 international retailers are currently in talks, seeking partners to enter the country’s retail sector this year.

This will be the highest number of foreign brands entering India in one year so far, while these global brands are expected to open 5,000 stores across India through the franchise route over the next five years, and cumulatively invest about $250 million, reports the business news portal, quoting Franchise India Holdings chairman Gaurav Marya.