Organised retail in India poised for strong growth: Report

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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)

Monday, 16 April 2018

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