Organised retail is set to explode; could contribute 25% of the total by 2011

Indiaretailbiz.com 3 July 2008 

India's organised retail industry is set to explode. It is growing at a faster pace than was expected and could costitute 25% of the overall retail sector by 2011 in India. This has been concluded by a study on retail sector prepared by Deloitte Haskins and Sells - one of the four largest accounting firms in the world.

According to findings of the study, new stores, increased spending power, and easy access to credit have led to organised retail recording a scorching rate of growth at 50% per annum in 2007.

While, organised retail had 8% share of overall retail in 2007, it was just 5% in 2006, says the study. The study has estimated India's retail sector, both organised and unorganised, at $295 billion.

The study, largely based on retail space under development, estimates retailers having either taken up or taking up new space of 316 million sq ft, almost five times more than 68 million sq ft they bought in 2006.

"For this investment in space to pay off, the industry would have to grow at around 50 per cent or so," said Shyamak Tata, Partner at Deloitte Haskins and Sells. Tata was responsible for preparing the study. "If retail continues to grow at this pace, the malls will get used," added Tata. "If not, then rentals will get affected."

Interestingly, Edelweiss Capital- a share brokerage firm, which had earlier prepared a similar report on the subject had predicted that organised retail, against present share of 4.1%, will account for 15% of the retail sales by March 2011 .