As
per capita income increases, organised retail sector in India will
witness strong growth in the years to come, and segments like apparel
will reap the benefits, says a recent report
from an American multinational investment bank and financial services
company. Favourable demographics and increasing urbanisation would help
in robust growth.
Currently,
organised retail constitutes only 7 per cent of the market size, and
post demonetisation and implementation of the Goods and Services Tax
(GST), organised players would attain greater market share, media
reports said quoting Jefferies report.
“We believe that Indian
organised retail is in a sweet spot, especially post demonetisation and
GST, given the under-penetration at 7 per cent of total trade and favourable macro,” Jefferies said in the report.
“Organised
retail is still in the midst of a secular growth journey with several
segments on the cusp of strong growth as per capita income rises past
the crucial $2,000 threshold that has heralded strong growth in most
other markets,” the report added.
Most
retailers have changed their business models, and are now closing
loss-making outlets, while increasing private label mix. They are also
making better use of data analytics, the report noted.
The
brokerage predicts that more consolidation and merger and acquisition
(M&A) activities will be witnessed in the sector, particularly
between online and offline players. However, the strong growth prospects
will keep the retail sector valuations expensive. (RKS)