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Despite rising short-term economic uncertainty and GDP projections cut to 5-6%, the consumption in India is expected to touch $3,600 billion in 2020 from $900 billion in 2010, says the CII and Boston Consulting Group (BCG) report on Retail and FMCG.
"Organised retail in India is at an inflection point. There is healthy revenue growth of 25% CAGR over the last 5 years, however, organised retail contributes to less than 10% of overall sales across multiple categories".
"This gap in sales forms the biggest growth opportunity for organised retail, especially with consumption expected to touch $3.6 trillion by 2020 from the 2010 figure of $900 billion," the report titled 'Winning with Uncertainty' by CII and BCG said.
Hence, it is imperative that FMCG and retail organisations balance caution due to short-term uncertainty with investment required to drive long-term growth, it said.
"Businesses are capital constrained (due to a global slowdown), facing volatile commodity prices and seeing a cautious consumer sentiment".
"The Indian consumer however, is still willing to spend and trade up for the right value proposition, differentiation and innovation. Hence consumer businesses in India, need to constantly walk the tight rope balancing growth and efficiency," Titan Industries Managing Director Bhaskar Bhat said.
The report highlights the need for FMCG and retail companies in India to prepare for an increasingly uncertain future and proactively take measures to leverage market volatility to create competitive advantage.
The report said that uncertainty in business environment in India was primarily being driven by six structural factors, namely, changing macroeconomic scenarios in the country; heightened volatility in commodity prices; uncertainty in policy making; rapidly evolving consumer base and behaviour; emergence of new breeds of competitors within industries and development of game-changing technology.
