Retail set to see 250% growth this year

The retail sector is booming this year; and signs of this are only too evident. Industry sales are expected to grow by a whopping 250 per cent to Rs 140,000 crore (Rs 140 billion) in the current financial year, compared with Rs 40,000 crore (Rs 400 billion) last year.

"The growth in sales will translate into a 40 per cent growth in retail financing in the current year, driven by strong fundamentals and the economic boom in the country," Chanda Kochhar, executive director of ICICI Bank, said at the Indian Retail Summit organised by the Indira group of institutes in Mumbai.

The bank disbursed Rs 18,000 crore (Rs 180 billion) to the retail industry in the first six months of 2004-05, against Rs 11,000 crore (Rs 110 billion) in the corresponding period last year.

Almost 60 per cent of the total loans extended by the bank were for the retail sector, she added.

Most heads of retail companies present at the summit said the key factors driving the sector were affordability (value for money products), improved services (home delivery), supply chain management and location.

In the organised retail sector, consumer spending is the highest in the food and grocery segment.

But IS Narula, chief executive officer of the Pune-based Ishanya, a speciality mall for interior and exterior building products, said:  "It is just not the location but the fact that the mall itself is a destination that is attracting consumers." He predicted that speciality stores would spring up soon.

Raghu Pillai, president and chief executive (retail) of RPG Enterprises, said: "The introduction of value-added tax will boost the organised retail sector in India. The government must also consider equitable food laws, a uniform Shops and Establishment Act, besides relooking the MRTP Act to see the sector exploit its potential."