Apparel Online India Magazine March 1st Issue 2019 | Page 32

DOMESTIC CONSUMPTION SHARE
MAKES INDIA UNIQUELY
POSITIONED
RETAIL INDUSTRY IN
INDIA WITH A FOCUS ON
APPAREL RETAIL 2018-19
MACROECONOMIC OVERVIEW OF INDIA
India is one of the fastest growing economies in the
world and is the 6th largest economy that is expected
to be among the top five global economies by FY 2020.
Currently, India ranks 6th in the world in terms of nominal
GDP and is the third largest economy in the world in PPP
terms. Since FY 2005, Indian economy’s growth rate has
been twice as that of the world economy and it is expected
to sustain this growth momentum going forward. India’s
GDP is expected to reach US $ 3.5 trillion by FY 2021 and
to US $ 11 trillion by FY 2030 (in nominal terms). This will
be equivalent to China’s economy and about 60 per cent
of the US economy as in FY 2015. It is also expected that
this growth trajectory of Indian economy will enable India
to be among the top three global economies by FY 2050.
Not to deny that sustained high-real GDP growth of
over 6 per cent, since FY 1991 has led to a fundamental
transformation of the Indian economy. This profoundly
well-researched article on India’s retail scenario has been
written by the experts of team Technopak – Ankur Bisen,
Senior Vice President; Ravindra Yadav, Associate Vice
President and Ravinder Negi, Associate Consultant
and has been edited by Arvind Singhal, CMD.
32 Apparel Online India | MARCH 1-15, 2019 | www.apparelresources.com
India has an advantage as its estimated domestic
consumption share (measured as Private Final
Consumption Expenditure – PFCE) in its GDP was
~59 per cent in FY 2017. In comparison, China’s
domestic consumption share in its GDP was
estimated at ~38 per cent in the same year. High share
of private consumption in the GDP not only insulates
India from the vagaries of global economy but it also
implies that a sustainable high economic growth in
India directly translates into a sustained consumer
demand for merchandise and services. In 2018, India’s
retail basket is estimated to be ~50 per cent of its
private consumption (US $ 1,586 billion) and it is
expected to be ~48 per cent of private consumption
(US $ 2,240 billion) by FY 2021.
Currently, the food and groceries (F&G) segment forms
the major share of the retail market (~66.6 per cent),
which will continue to be the dominant contributor in the
retail market for a long time. However, this share will
witness a marginal declining trend in favour of rising
aspiration retail (Exhibit 1).
Exhibit 1: Share of various categories in overall retail
Type of Categories
Need based
Primary Discretionary
Other Discretionary
Categories 2013 2018 2021
Total Retail
(US $ billion) 447 792 1070
67.3% 66.6% 65.8%
Apparel &
Accessories* 8.2% 7.9% 7.8%
Jewellery 7.4% 7.8% 8.1%
Consumer
Electronics 5.3% 6.1% 6.7%
Home & Living 4.2% 4.3% 4.4%
Pharmacy &
Wellness 2.8% 2.9% 3.0%
Footwear 1.2% 1.2% 1.3%
Others 3.6% 3.2% 3.0%
Total 100% 100% 100%
Food and
Grocery
* Accessories includes Bags, Belts, Wallets;
Others include Books & Stationery, Toys, Eyewear, Sports Goods, Alcoholic Beverages &
Tobacco etc.
Source: Technopak Analysis; 1 US $ = Rs. 65
SHARE OF RETAIL CONSUMER SPENDING
IN CITIES
Among the cities, Delhi and Mumbai have
contributed about 9 per cent of India’s total
retail spending. Top 22 cities have accounted for
29 per cent of total retail, and top 72 cities have
accounted for almost 39 per cent.