Indian retail sector is continuing to grow despite irregular global economic trends. A.T. Kearney, a global consultancy firm has ranked India as fourth most attractive nation for retail investment among 30 emerging markets. According to Booz & Company (India) Pvt. Ltd. organized retail segment in India accounted for only 5-6% of total retail market in 2010.

The Business Monitor International India Retail report has estimated that the total retail sales in India will grow from US$ 411 billion in 2011 to US$ 804 billion by 2015. Robust economic growth, high disposable income with the end-consumer and rapid construction of organized retail infrastructure are key factors behind the forecast. Other consulting agencies like Technopak Advisors also estimate the organized retail sector to grow at more than 30 per cent in few years.

Indian retail sector accounts for 22 per cent of the gross domestic product (GDP) and contributes to 8 per cent of the total employment.

The list of segments which present themselves for a high growth opportunity in the Indian retail landscape is endless. Some of these segments are clothing, textiles, fashion accessories, jewelry, watches, footwear, health, beauty care, pharmaceuticals, consumer durables, home appliances, mobiles, furnishings, utensils, furniture, food, grocery, catering, books, music, gifts and entertainment.

Out of these categories, the maximum contributor to the total retail market value is ‘food’ segment, contributing 62 percent of the total value, followed by ‘fashion and fashion accessories’, contributing 16 percent, as per Pantaloon Retail India report of 2008.

India’s dynamic retail landscape presents a big opportunity to foreign investors. “India is the third-most attractive retail market for global retailers among the 30 largest emerging markets”, mentions an AT Kearney’s report published in 2010.

More than 95% of the Indian retail sector falls in the unorganized sector category. Organized retail is expected to grow from 5-6% to 14-18 % of the total retail market by 2015, according to a McKinsey & Company report titled 'The Great Indian Bazaar: Organized Retail Comes of Age in India'.

‘The Retailer’ report from Ernst & Young 2009 highlights that organised retail sector’s penetration level is 85% in US, 80% in France, 66% in Japan, 20% in China and, merely 5-6% in India. This confirms that India is at an early stage of evolution in the organised retail space and has a huge growth potential.

Many big players are already here in India. For instance, hypermarkets like Spencer’s and Big Bazaar, departmental stores like Shopper’s Stop and Lifestyle and Supermarkets like Apna Bazaar and Food Bazaar have set up shops and are busy expanding.

Bharti Walmart, Metro and Booker have already forayed into the ‘cash and carry’ category, a format which sells goods in wholesale on a self service basis. This category serves business customers like shop owners (kiranas), traders, caterers, institutional buyers like hotels, restaurants, schools and offices who settle the invoice on the spot in cash, and carry the goods away themselves.

The penetration of organized retail will happen much faster in the coming decade, even in tier 2 and tier 3 Indian cities, because of the changing demographics of India’s population and a healthy rate of economic growth. With good underlying economic growth, increase in disposable income, increased awareness due to penetration of broadband and mobile devices with internet accessibility, the demand for consumer goods will rise. With better systems and processes in place, all this is bound to assist in increasing the penetration of the organized retail sector in India.

Rural retailing is also poised to grow multifold in India. With several states in the country permitting retailers to purchase produce directly from farmers, the farmers too are adapting to the new opportunity to cultivate assigned crops and take special care of the same. This gets them instant credit at higher prices than what they received from the erstwhile traders/middlemen. Corporate retailers like ITC, Godrej, Reliance, AV Birla, Mahindra & Mahindra and many others have already established the farm linkages.

India’s rural markets offer a sea of an opportunity for the Retail sector. According to National Council of Applied Economic Research (NCAER) reports, rural India is home to 720 million consumers across 627,000 villages. 17% of these villages account for 50% of the rural population as well as 60% of rural wealth. This implies that reaching out to just 100,000 plus villages will ensure access to most of the rural opportunity.