of consumerism is here. India is currently experiencing a retail boom with various national and international retail players trying to grab their share of the growing Indian middle class.
At the India Retail Forum 2007, Vinod Sawhney, president and CEO of Bharti Retail, discussed the importance of retail in a growing economy. He highlighted the rapid rise in India's foreign exchange to US$ 271 billion in 2007.
The average household disposable income is growing by a healthy 5.9 per cent and the average individual disposable income is growing by 3.6 per cent each year. At this rate, the average household income in India is expected to triple over the next two decades.
By the end of 2005, the total expenditure on consumer products in India was Rs 17 trillion. Sawhney said that keeping all other factors of growth in mind, this will quadruple in the coming two decades and reach Rs 70 trillion by 2025.
In such a scenario, consumption will be driven by certain key locations in the country such as the top 10 cities, including Chandigarh, Goa, Mumbai, Pune, Bangalore, New Delhi and Gurgaon. These cities will facilitate consumption growth in new consumption categories such as jewellery, pharma, fashion, entertainment and services.
Currently, the food and grocery category commands the highest percentage share of household spending. Most Indians still spend 46 per cent of their income on food. According to Sawhney, food and grocery is a very important driver of consumption and will remain so in the coming decades also. But the share of food and grocery in the pie will come down in comparison to other categories such as mobiles, real estate, automobiles, fashion and other entertainment services.
Sawhney says that in a resurgent economic scenario, the retail segment is likely to benefit society 360 degrees. Retail creates 10 per cent of the jobs in the world and contributes 10 per cent to the world share of GDP. In India, retail is likely to create an estimated two million jobs by the end of 2010. The masses will thus benefit with opportunities for employment and franchising.
Consumers will get goods and services at lower prices but better quality. There will be an improvement in the overall shopping experience with wider assortment of and access to goods, which will in turn cater to the diverse populations across the country. Farmers will benefit from the elimination of middlemen and will thus earn higher profits and have access to better markets. Industries will get better infrastructure to sell their goods and services and there will be a radical improvement in the packaging and designing of products.