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Investments in Retail Benefits Everyone

Prof. Vaidyanathan of IIM, Bangalore wrote about Retail revolution — Trading away the livelihood of millions? in the The Hindu Business Line on March 8, 2007

While I agree that retailers should be encouraged to use technology including telecom and internet, I don’t think the livelihood of small and medium retailers are threatened in anyway. I feel the current investments in organized retail will help improve the quality of life of people involved in retail trade

As part of my job, I read various research reports, articles and views on the growth and opportunity in retail. While numbers vary between these reports, we can still use them to see how unorganized retail will still have a significant share in the retail business. Here are some numbers that I have seen in the last few months

  • India’s retail trade is about Rs.10 trillion in 2006
  • Organized retail share is about 3% [Rs. 0.3 trillion]. This means unorganized retail volume is Rs.9.7 trillion
  • Retail trade volume recording about 15-20% year on year growth & is expected to be about Rs.35 trillion in 2015
  • Organized retail is expected to have 15% share of the market in 2015
  • The above means, organized retail will be about Rs.5 trillion & unorganized retail is about Rs.30 trillion

Basically, we can infer that unorganized retail volume is set to grow from Rs.9.7 trillion today to Rs.30 trillion in 2015. This is a huge growth and it offers significant opportunity for all

As Indian Consumers get more purchasing power, there is an opportunity for everyone here. From the tiny trader to the global retail giant, everyone stands to benefit due to India’s growth. The fact that retail is the 2nd or 3rd largest employer means that more people stand to benefit due to investments in retail

I hope we start looking at these investments as an expansion of the overall market rather than what is one’s share in the market

So, the Kirana shop owner should concentrate on his customers and his business instead of wasting his time-fighting investment in retail. At the end of the day, the new investments offer a win-win for the retail trader, people employed by retail trade and to the consumer.
– Kumar Vembu