Indian Urban Market- Brief Overview
The Indian urban world is undergoing a major transition - experiencing a plethora of changes in terms of infrastructure, education, lifestyles, services etc. Indians are amongst the world's most positive clan when it comes to job prospects and personal finances, according to Nielsen's Global Online Consumer Confidence 2Q 2011. Also, government estimates state that in the coming 40 years, half of the Indians would reside in cities.
Such facts bring in the point that India is witnessing rapid urbanisation and during the coming years, urban development will touch new heights due to India's strong growth trajectory on economic, social and global parameters.
Urban markets can broadly be segregated into sub-segments like retail, fast moving consumer goods (FMCG), automobiles and consumer durables. Luxury markets in India are also an upcoming segment as the elite-urban population drives the growth of luxury brands.
Retail
Indian retail business is valued at around US$ 550 billion as of now and about four per cent of it accounts for the organised sector. A report by Boston Consulting Group (BCG) has revealed that the country's organised retail is estimated at US$ 28 billion with around 7 per cent penetration. It is projected to become a US$ 260 billion business over the next decade, with around 21 per cent penetration.
Cumulative foreign direct investment (FDI) inflows in single-brand retail trading during April 2000 to August 2011 stood at US$ 44.45 million, according to the Department of Industrial Policy and Promotion (DIPP).
Certain developments and investments that took place on the Indian retail canvas recently are discussed below-
- Real estate major DLF's subsidiary DLF Brands has struck a deal with Chicago-based Claire's Stores Inc to bring the latter to India and open 75 stores over 2011-16. Claire's is a specialty retailer which targets young girls through over 3,000 stores globally.
- French retail chain, Carrefour is on an expansion spree in India wherein it is about to finalise lease deals across 10 to 12 sites in the country to open cash-and-carry (wholesale) outlets.
- World's largest retailer Walmart will open an innovation lab in Bangalore by the end of 2011. The lab would be tasked to drive the US$ 422-billion company's next generation innovations that impact shopping behavior among the customers.
FMCG
FMCG sector is scaling new heights due to the entry of foreign brands and development of organised retailing in a big way. Indian packaged food industry, which is currently estimated at around US$ 10 billion, is driving retail sales to a major extent in India. FMCG firms have also started tapping net savvy consumers to give a boost to their revenue. Companies, including Dabur, Himalaya Herbal Healthcare, Neutrogena, Oriflame, Amul, Future Group, Aditya Birla Retail, REI Agro and Carrefour are making efforts to expand their reach through internet.
- US FMCG giant McCormick, that has recently formed a joint venture (JV) with Indian basmati rice brand Kohinoor Foods, intends to tap Indian packaged food industry and achieve sales of US$ 85 million during the first year of operations in the country.
- FMCG firm GSK Consumer Healthcare (GSKCH) has made a debut into Indian breakfast cereal market by launching oats cereal under its flagship brand 'Horlicks'. The breakfast cereal market in India is currently dominated by PepsiCo and Kellogg's.
- Oral and dental hygiene products manufacturer Colgate Palmolive has decided to invest US$ 40 million to establish a greenfield facility at an upcoming industrial estate in Sanand which is being developed by state-run Gujarat Industrial Development Corporation (GIDC).
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