5. HOW THE SECTOR IS DIVIDED
COMPARED TO OTHER MARKETS
Source : AT Kearney Global Retail Development Index, 2013
6. INFLATIONARY AND DEFLATIONARY PRESSURE IN INDIAN
ECONOMY
Three main reasons for inflationary pressures
on the Indian Economy are:
I. Crude Oil
II. Agriculture( Rural Inflation)
III. Inflationary Expectation
7. CRUDE OIL PRICES EFFECT
Crude-oil prices are expected to remain benign in the
coming months for at least three reasons: weaker
global demand, increased supplies, and the global
monetary and liquidity environment.
The sectors that will have a positive impact due to
falling oil prices directly as well as indirectly will be a)
automobiles, (b) plastic industries (c) chemicals , (d)
paints, (e) footwear etc.
But the retail industry don’t benefit much as the fall in
crude prices cant be replicated exactly at the retail
level
8. AGRICULTURE(RURAL INFLATION) EFFECT
India’s inflation will be shaped by pressures from
agriculture, foreign and domestic.
a. Food Inflation :The major reason for food inflation is
the mismatch of demand and supply of agricultural
products
b. Wage Pressure :The most dramatic structural change
relates to wage pressures. wage growth has declined to
about 3.6 percent from over 20 percent. If these trends
continue, rural wage growth can continue to
decelerate, further moderating inflationary pressures
9. INFLATIONARY EXPECTATION EFFECT
Consumer price inflation was at 6.5 percent for 2014-15 .
The estimate for 2015-16 for CPI inflation is 5.0-5.5
percent range.
The implication is that the economy will over-perform
which would clear the path for further monetary policy
easing.
Trends in financial markets suggest that there has been a
gradual easing of deposit rates in recent months as yields
on 10 year government bonds have been falling
consistently during this period. Declining yields could
trigger reduction in the lending rates by the banks in the
coming months.
10. SAVINGS AND INVESTMENT IN LAST 2
YEARS
2012-
2013
2013-
2014
2014-
2015
Household 23.6 24 24.4
Private 8.4 8.5 8.6
Public 2.0 2.8 3.5
Gross Domestic
Saving
34 35.3 37.6
CAD -3.5 -3.8 -2.8
SAVINGS TREND (% 0f GDP)
11. Fall in inflation has led to rise in overall savings
Public savings have shown rapid increase while
household & private savings have steady
growth
Bank deposits continue to dominate the overall
savings while insurance & share markets
investments have grown significantly
Higher purchasing power and less household
and private savings show increase in
expenditure
SAVINGS AND INVESTMENT IN LAST 2 YEARS
Gross Domestic Savings & its Composition
12. The CURRENT ACCOUNT is the balance of trade between a country and its trading partners, reflecting all
payments between countries for goods, services, interest and dividends.
A deficit in the current account shows the country is spending more on foreign trade than it is earning, and
that it is borrowing capital from foreign sources to make up the deficit.
WHAT IS CURRENT ACCOUNT DEFICIT ???
13. Want to buy an Aston Martin and still waiting for it the correct time?
Then you missed it dear as you could have bought that in 2010 when the exchange rate was
absolutely low.
EFFECT OF EXCHANGE RATE ON RETAIL
0
20
40
60
80
100
120
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
INR VS GBP
INR VS GBP
14. "It all depends.”
• It could equally be pointing to a highly productive, growing economy
• It could reflect perfectly sensible intertemporal trade, perhaps because of a temporary shock or shifting
demographics
• Deficits reflect underlying economic trends, which may be desirable or undesirable for a country at a
particular point in time.
IS LOW CURRENT ACCOUNT DEFICIT GOOD?
15. FISCAL AND MONETARY POLICY
WHAT IS FISCAL AND MONETARY POLICY ??
Impact on Retail Sector –
GST system of taxation
Reduction in corporate tax
Infrastructural development
Increased disposable income
16. INDIAN RETAIL – THE ROAD AHEAD
The Indian retail market, currently estimated at $540 billion, is project to grow at a compounded
annual growth rate of 6 per cent to reach $865 billion by 2023.*
An important contributory factor in growth of India’s retail sector is growing middle class which
is expected to increase from 21 million households today to 91 million households in 2030.
Modern retail with a penetration of only 5% is expected to grow about six times from the current 27
billion USD to 220 billion USD, across all categories and segments by 2020.*
*Source : ‘Yes Bank - Assocham’ study
Editor's Notes
The Gross Domestic Product per capita in India was last recorded at 1262.64 US dollars in 2014. The GDP per Capita in India is equivalent to 10 percent of the world's average. GDP per capita in India averaged 477.50 USD from 1960 until 2014, reaching an all time high of 1262.64 USD in 2014 and a record low of 228.34 USD in 1960.
The Gross Domestic Product per capita in India was last recorded at 5565.05 US dollars in 2014, when adjusted by purchasing power parity (PPP). The GDP per Capita, in India, when adjusted by Purchasing Power Parity is equivalent to 31 percent of the world's average. GDP per capita PPP in India averaged 3120.57 USD from 1990 until 2014, reaching an all time high of 5565.05 USD in 2014 and a record low of 1760.02 USD in 1991.
Today retail sector contributing 10% to country’s GDP. Indian retail industry is ranked among the ten largest retail markets in the world. The change of attitudes of Indian consumers and the emergence of organized retail formats have transformed the face of retailing in India.
92% sector in India is unorganised, those that fall majorly under “mom and pop” shops, and only 8% is organised owning to recent change in FDI policy we will be touching upon shortly. These 8% organised stores are dominated primarily by retailers who have multiple stores.
Indian retail is expected to grow 25 per cent annually. Modern retail in India could be worth US$ 175-200 billion by 2016. The Food Retail Industry in India dominates the shopping basket. The Mobile phone Retail Industry in India is already a US$ 16.7 billion business, growing at over 20 per cent per year. The future of the India Retail Industry looks promising with the growing of the market, with the government policies becoming more favourable and the emerging technologies facilitating operations.
According to AT Kearney Global retail Development Index, 2013, India is ranked second of 30 developing countries, with E-tailing slowly making its presence felt and IT tools being used radically changing the buying behaviour across the globe.