As an after effect of the Centre’s move to allow 51 per cent foreign direct investment (FDI) in multi-brand and 100 per cent in single-brand retail, the pie of corporate-backed retail shops is expected to grow substantially. As the retail market size jumps from $490 billion at present to $810 billion by 2021, corporatised retail is likely to rise from seven per cent of the total market share to 20 per cent, according to Technopak Advisors, a global management consultancy firm.

This means that we could expect big foreign brands like Carrefour, Tesco, HomeDepot , Aldi etc to eat up the share of local retailers or independent retailers in the country in future.

Corporatised retail refers to retail businesses owned and managed by a limited company or a partnership firm.

Interestingly, maximum investment will happen in domains like jewellery and watches, electronics, home improvement, pharmacy and footwear. These categories are expected to grow from 15 per cent of the total corporatised retail market at present to 48 per cent by 2021.

Ankur Bisen, associate vice president, Technopak Advisors says, “The reason for maximum investment not coming to segments like food and groceries is the back-end challenges.Our retail environment does not provide a proper structure for foreign retailers to aggressively invest in food and grocery stores at present.”

While 70 per cent of total merchandise retail comprises food and groceries, only 3 per cent of food and groceries is retailed through corporatised retail. This scenario is not going to change much in the coming decade. While, corporatised retail’s share will register an impressive growth in other categories, food and groceries will prove to be a challenge. By 2021, the share of corporatised retail in food and groceries retail will grow by a mere 2 per cent to around per cent. Similar is the case with Apparel which will grow from 16 per cent at present to 17 per cent after a decade.

“We are not sure whether the big chunk of investment will come through single- brand or multi-brand, it is a little premature to analyse that,” admits Bisen. But definitely the foreign retailers will eat up the share of Independent or local retailers in India. Independent retail refers to single shops owned and managed by individuals or a family. It also include informal retail comprising hawkers, street vendors etc

The Indian corporate retailers, which account for 95 per cent of teh market, will shrink to 50 per cent by 2021. The change has happened gradually in the past too. In 2001, the share of corporatised retail in the retail sector was under five per cent while independent retail accounted for the remaining 95 per cent. By 2011, the share of corporatised retail grew to 7 per cent; this is projected to grow further to 20 per cent by 2021.

On the employment front, corporatised retail will not grab any jobs in India, feels Technopak. Said Bisen, “Even in the past, employment in corporatised retail has not grown at the cost of independent retail. In fact, independent retail has added four million jobs in the last decade. In the next decade, while corporatised retail will add another 2.7 million jobs, independent retail will create nine million more jobs.” The argument that FDI in retail will lead to job losses in independent retail is therefore flawed, he added.

(Edited by Prem Udayabhanu)

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