EMIS Emerging Market Information Service India Retail Sector | Page 20

Retail Sector SWOT Analysis
Strengths

Opportunities

India is one of the fastest-growing consumer markets in the world. By
2025, it is estimated to grow four times to become the fifth-largest
globally. Urban India will account for roughly 70% of the consumption
growth, while rural India will grow 32% by 2025. The majority of the
FMCG categories are growing faster in rural areas than in urban,
suggesting that rural markets contain many untapped opportunities.
India is very diverse both culturally and economically, so products
catering to various consumer needs can be potentially successful there.

. Consumption in India will continue to grow regardless of the general

pace of the economy. Rising disposable incomes have resulted in
higher levels of discretionary spending and aspirational shopping. TV,
the Internet and other media help raise consumer awareness and the
desirability of the latest lifestyle trends and brands. Young, working-age
people are the majority of the Indian population, which promises
dynamic consumer behavior and eager response to new product
launches and product innovation.

SWOT
Analysis

The market is very fragmented and largely price-driven. The condition
of the road network affects supply chain efficiency. Food wastage due
to transportation and storage problems is very high. In rural India,
regular power supply is not a certainty and the character of purchases
is seasonal. Cultural idiosyncrasies affect perception and sales of
certain products. Skilled personnel is hard to find. The choice of real
estate suitable for large retail operations is very limited.

Rising inflation has an adverse effect on consumer spending. Heavy
taxation, varying from state to state, curbs business activities. Price
competition among retailers puts downward pressure on margins. India
seems not as well positioned as other Southern and South-East Asian
economies to take up moving global business. Political changes in the
state and central governments and the USD/INR currency fluctuation
poses risks to foreign investment in retail in India.

Weaknesses

Threats
…

Source: PWC; McKinsey Global Institute; IBEF; company annual reports;
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