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The latest projections from the United Nations suggest that there will be 1.6bn people living in India by 2050, an additional 400m
compared to today, and the same as the population of the whole planet in 1900. This alone will establish India as one of the largest
consumer markets in the world.

 


 
 

The impact this demographic change could have on the Indian economy is also startling. The latest economic projections suggest
that India could house the second largest economy in the world, after China, by 2050 - overtaking the USA, Japan, Germany,
France and the UK in the process.

India at a Glance
 The size of India¶s population

 Number of inhabitants per sq km living in India

 ! Rate at which the Indian economy grew in 2009

" Size of the grocery retail sector in 2009

! Modern retail¶s contribution to the total market

#! Grocery as a % of total retail in India

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Dut while this demographic and economic shift continues to unfold, the Indian retail sector too is entering a period of significant
change, with reports of cash-strapped chains like hypermarket operator Vishal Retail, and with local discounter Subhiksha yet to
resume trading following the closure of all its stores in March 2009.

IGD's Nick Everitt will be speaking

at the India Retail Forum in
September. Learn more about it
here.

Of more relevance perhaps is the decision by The Department of Industrial Policy and Promotion (DIPP) to release a discussion
paper among the industry on the possibility of relaxing current legislation relating to Foreign Direct Investment (FDI) in multi-brand
retailing ² a decision which has since helped to accelerate the expansion of modern retail in other Asian markets, most notably
China, Thailand and Indonesia.

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One development which continues to grab the headlines is the growing move towards private label, now a cornerstone for many
best-in-class operators based in developed markets and an option retailers across India are now clearly eager to begin to leverage
more strongly.

Our strategy is to focus more in private labels as they give more margins and
also increase our own brand profile.

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This movement towards own label can be closely linked to the industry¶s desire to drive profitability from existing assets more
heavily, rather than channel investment accelerating the number of new store openings in the short-term. The move will also allow
local retailers to begin to leverage their brands in a similar way to those best-in-class private label operators in Western Europe ²
particularly Carrefour, for example, which in recent years has identified a need to commercially leverage its brand more heavily.

Top Private Label Retailers in India

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Pantaloon Retail 1,211 686 0.36

Reliance Retail 401 981 0.11

Aditya Dirla Retail 297 646 0.08

Dairy Farm 272 64 0.08

RPG 264 329 0.07

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Leading the charge at the current time is Aditya Dirla Retail, operator of over 600 µmore. For you¶ and µmore. MEGASTORE¶ stores.
In June 2010, for example, the retailer unveiled new plans to grow its share of sales from private label from 20% to 30% over a
two to three year window in a bid to drive margins and own brand profile, a strategy which will involve bringing in new private label
ranges to help boost the existing portfolio of 350 SKUs.

At the same time, both Tesco and Walmart have begun to distribute several ranges from their extensive private label portfolios to
their local partners in India. First to do so was Walmart in September 2009 when it began sourcing eight brands from its private
label range to Easy Day, a fresh focused supermarket chain owned and operated by Walmart¶s joint-venture partner in India, Dharti
Retail. Drands stocked across Easy Day stores include µGreat Value¶, Walmart¶s recently rejuvenated and biggest-selling entry level
own label brand, and µGeorge¶, the ASDA-born clothing range.
Shortly after, Tesco started to supply Trent¶s µStar Dazzar¶ stores with
approximately 50 of its private label brands, including items from the
Tesco Value and Discounter range.

Dy doing so, both Dharti and Trent have been able to complement their
existing private label offers by leveraging the knowledge and expertise of
their strategic partners to help plug the gaps in their respective own label
offers, broadening the appeal of private label products and the quality
associated with them.

At the same time, the product supply relationship in place will give both
Walmart and Tesco extensive insight on the hypermarket and
supermarket shopper in India. This is currently missing from their
repertoire because the D2D wholesale model both companies have had to
establish as a means of entry into India. This information could prove
highly beneficial if the Indian government was to relax current legislation
regarding FDI.

Products from the 'more. For you' range at Aditya Dirla Retail

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Despite these efforts to boost the sale of private label products, it¶s important to note where India currently sits in the market
progression lifecycle, creating a number of potential barriers for future growth as a result:

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   ² The majority of India's grocery retail market is classified as being 'unorganised',
with approximately 96% of total grocery retail sales coming from µmom & pop¶ stores (traditionally referred to as kiranas)
and wet markets. This alone will have a significant impact on the rate at which private label sales progress.
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² Supermarket and hypermarket stores have certainly featured in their numbers in
recent years as retailers push to lead the charge in the race for space. Recent trips to China and South Korea, however,
have shown that India has yet to experience the same level of multi-format activity compared to some of its Asian
neighbours, hence retailers haven¶t yet had to develop new private label tiers to compete against more discount or
premium driven formats.

Clearly the next few years will see a stronger shift towards private label, with retailers and suppliers in the region encouraged to
keep close to developments in the west, as well as those closer to home.

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India Retail Forum 28-29 September 2010, Mumbai

IGD's Head of Market Intelligence, Nick Everitt, will be speaking at the India Retail Forum (IRF)
which takes place on 28-29 September in Mumbai. This event will bring together major retailers,
manufacturers and support companies to learn about and discuss the opportunities that the Indian
market offers. Find out more about the event here.

India profile on Retail Analysis

Discover key facts and data about the Indian grocery market and its major retailers with our India
profile. Retail Analysis subscribers can access it here. Non-subscribers can email us here to find out
how to get logged in.