'India on cusp of retail revolution'

INDIA ECONOMIC SUMMIT 2006

Retail offers an opportunity to enhance purchasing power at the bottom of the pyramid, says RIL Chairman Mukesh Ambani

India stands at the cusp of an opportunity in organized retail given the growth in the economy and the increasing purchasing power of the masses.

Speaking at a session on whether there will really be a retail revolution in the country, participants including Reliance Industries Chairman Mukesh Ambani, Industry Secretary Ajay Dua, Emaar Properties Chairman Mohamed Alabbar and Godrej Group Chairman Adi Godrej said the sector had the potential to create employment for between one and two million people per year over the next decade.

Ambani was categorical in stating that there is potential for a revolution in retail. "India is on a super growth strategy. 7-8 per cent GDP growth is not enough though. We have no option but to grow at double-digit rates. India will grow on the basis of internal consumption and retail presents an opportunity for enhancing the purchasing power at the bottom of the pyramid", he said.

Citing recent changes in policy, Ambani added that allowing corporates to buy agricultural produce directly from farmers would increase the latter's income manifold.

"The concept of farm to fork means that it will integrate the Indian user with the global chain. When US President George Bush came, the mango market was opened up. Walmart coming in helped us open the US market", he added.

The organised retail market of $300 billion in India is growing rapidly- by some estimates at 10-15 per cent per annum. Dua said the future growth of the industry would depend on the macro-economic growth of the country and how companies tap the market.

Citing data, he said that there is reason to be optimistic about the sector. However, he said the companies would have to plan to not only address the metros and big towns, but also target the 739 cities, each of which have a population of 50,000 people.

On the best model for the retail sector, Ambani said partnering with small shopkeepers made sense. "The kirana store owner knows his customer. Partnering with him is an opportunity to build up the chain", he said.

With regard to the challenges that could pose a hurdle, participants cited the availability of real estate as a key challenge. Giving figures, Alabbar said that the per capita availability of retail space was the highest in the US at 13 sq ft per person.

"In comparison, it is 7 sq ft in Asia, 3.5 sq ft in the Middle East and 3 sqft in India. The overall potential is good but there are some infrastructure constraints that need to be addressed," he added.