Financial Chronicle 29 Dec 2008
VIVEK SINHA & VRISHTI BENIWAL
ORGANISED retail may be reeling under slowdown shocks but an increase in consumer expenditure may help a few retail verticals register robust growth in the next calendar year. Food & grocery, large format stores of consumer durables & electronics, health & wellness, mobile telephony and other specialty stores in the home décor and footwear category are the five retail verticals that are slated for maximum growth, according to Arvind K Singhal, chairman of management consultancy Technopak Advisors.
“The consumption, in all probability will increase by 8 per cent in the next fiscal,” says Singhal. He said that understanding the mindset of a consumer and providing quick and customised services will be the key to future growth of retailers. “Mere knowledge that people are spending may not be enough, its important to identify with ‘what’ a consumer is spending upon,” explains Singhal. “Even if the GDP growth slips down to 6 per cent, it will still imply a healthy growth in customer spending in 2009 compared with 2008.” Singhal further points out that the profitability of many retailers came under pressure in 2008 partly due to their aggressive expansion and partly due to high operating expenses on account of rentals and salaries in particular. In fact, high rentals have been a bone of contention for the organised retail players.
Various reports have said that organised retailers have been paying rentals as high as 7-10 per cent of their total sales compared with 2-3 per cent of the global average. “In 2009, rentals are going to be soft and hence the margins of retailers should improve,” he adds.
The growth potential for these five retail verticals is robust also due to the fact that though these enjoy a lager share in the overall retail market of the country yet their share in the organised category is miniscule.
VIVEK SINHA & VRISHTI BENIWAL
ORGANISED retail may be reeling under slowdown shocks but an increase in consumer expenditure may help a few retail verticals register robust growth in the next calendar year. Food & grocery, large format stores of consumer durables & electronics, health & wellness, mobile telephony and other specialty stores in the home décor and footwear category are the five retail verticals that are slated for maximum growth, according to Arvind K Singhal, chairman of management consultancy Technopak Advisors.
“The consumption, in all probability will increase by 8 per cent in the next fiscal,” says Singhal. He said that understanding the mindset of a consumer and providing quick and customised services will be the key to future growth of retailers. “Mere knowledge that people are spending may not be enough, its important to identify with ‘what’ a consumer is spending upon,” explains Singhal. “Even if the GDP growth slips down to 6 per cent, it will still imply a healthy growth in customer spending in 2009 compared with 2008.” Singhal further points out that the profitability of many retailers came under pressure in 2008 partly due to their aggressive expansion and partly due to high operating expenses on account of rentals and salaries in particular. In fact, high rentals have been a bone of contention for the organised retail players.
Various reports have said that organised retailers have been paying rentals as high as 7-10 per cent of their total sales compared with 2-3 per cent of the global average. “In 2009, rentals are going to be soft and hence the margins of retailers should improve,” he adds.
The growth potential for these five retail verticals is robust also due to the fact that though these enjoy a lager share in the overall retail market of the country yet their share in the organised category is miniscule.
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