How FDI will Help Indian Retail Industry ?

Future Group and Spencers Retail Executives shared their views on FDI in Indian Retail. An excerpt of the same proceedings is as below.

The entry of global retailers in the form of joint venture / partners will help Indian retailers jump the learning curve, as foreign retailers will bring with them international experience and best practices.

Successful retailing involves support from ancillaries that specialise in setting up distribution centers, training of staff, managing supply chain processes et al. The experts felt large investments from foreign retailers will draw specialized global players in the space (ancillary activities) to India. This will help improve overall processes and supply chain network, leading to improved efficiency and better profitability for Indian retail.

Large international retailers have superior platform in terms of IT infrastructure and have deeper understanding of consumer analytics. This will lead to better operational management in the Indian retail space, especially when the Indian retail space is looking for expansion.

FMCG companies in India have several stock keeping units (SKUs) in their portfolio, only ~20-25% of this is
aggressively marketed or made available to consumers. Thus, Indian retailers had no choice but to come up with their own private labels rather than focus on sales of existing companies. However, with the advent of foreign partner and his strong relationship with global FMCG companies, Indian retailers can get better product line, which can help drive sales growth and improve sales per sq. ft, which currently stands at almost half that of their global counterparts.

Introduction of Goods and Service Tax will benefit the Retailers as well as Government.

Leave a Reply

Your email address will not be published. Required fields are marked *