Kirana shops have symbolized food retailing in India for too long. However, the scenario is set to change for the better with organized players gaining a strong foothold in the segment.
The 2004 Global Retail Development Index (GRDI) developed by A T Kearney has ranked India next only to Russia on its list of attractive emerging markets in the retail sector. China follows India with a close third. The annual survey assesses nations based on country risk, market attractiveness, market saturation and time pressure.
Retailing in India is undergoing a major transformation from being an unorganized segment to an organized one. This transformation is attributed to rising income levels, increasing urbanization, increasing number of working women, exposure to western culture, changing lifestyles, etc. Until now the local Kiranawala dominated the retail sector. The kirana shops are highly fragmented consisting mainly of independent family-owned shops, where all the family members find employment. India can count about 12 million retail outlets making it a `nation of shopkeepers'. The retail industry is also the second largest employment generator in the country after agriculture.
A study on the food and grocery retail market by KSA Technopak stated that the country's overall retail sales now account for 44% of its GDP. Sixty-three percent of the total retail sales comprises of food items. Food retail sales have grown from Rs. 3.81 lakh cr in 1996 to Rs. 7.04 lakh cr in 2001 and currently it is estimated to be around Rs. 11 lakh cr. The advent of supermarkets, hypermarkets, discount stores, etc., in the food and grocery sector has triggered the growth. The importance of food cannot be undermined since an Indian household spends up to 50-60% of its monthly income on food and grocery products, which is one of the highest in the world. As per some estimates, over 200 retail mall projects (including food, apparel and other retail stores) are currently under active planning stage or under construction. This activity is spanning over 25 cities and in real estate terms it translates into over 25 million sq ft of new retail space in the market within next 24 months. This is an indication of things to come.
