BMI India Retail Report Q3 2016 - New Report Available

Household spending has remained constrained over the past two years even as the rest of the economy posts strong headline growth rates. We expect spending will gradually improve over our forecast period as consumers become confident. That being said, Indian households are highly price-conscious, as average income remains low. Key consumer groups will be the young, increasingly urbanised population who will emerge as the m ain drivers of retail spending.

However, most Indians are still rural dwellers, and the agriculture sector is a major employer. As agricultural incomes are typically low, and workers in the sector are affected by unstable weather patterns as well as underemployment, this limits the participation a large majority of the population can have in the modern retail sector. Indeed, while incomes are rising, they will remain small, with 14% of Indian households forecast to have a net income of USD10,000 or over by 2020. This means that retail spending will continue to be skewed in favour of essential purchases and non-organised retail, while rural dwellers, and retailers seeking to access this market, are hampered by poor transport infrastructure, which raises costs dramatically.

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While essentials, notably food and drink, transport and housing and utilities, will still account for the lion's share of retail spending in India over our forecast period, non-essential spending such as on restaurants and hotels is growing rapidly from a low base, and spending on areas such as health and education is also growing rapidly.

Key Views And Developments

Household spending on retail is expected to grow strongly over our forecast period, from USD1,268bn in 2016 to USD1,809bn by 2020.

Regulation in the e-commerce sector has facilitated the entrance of Amazon into the market, at the same time local companies Flipkart and SnapDeal are struggling to grow. Amazon has experienced rapid growth since it entered in 2015.

2017 is likely to see the entrance of international brands Apple and Ikea into India.

India's population is set to reach 1.39bn in 2020, while the urban population is also growing, and is set to reach 34.8% of the total by 2020.

The BMI India Retail Report has been researched at source and features BMI Research's independent assessment and forecasts for the retail sector. The report examines key drivers of retail sales growth and future prospects, including consumer spending and private sector investment.

BMI's BMI India Retail Report also examines the level of development and potential for growth of the retail sector, the commercial initiatives of major players, changing consumer demographics that influence demand and the regulatory environment. Key sub-sectors include mass grocery retail, autos, over-the-counter pharmaceuticals, computers and consumer electronics.

Key Benefits

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