Organised retail likely to slow down
The Economic Times, April 1, 2009, Page 18
Our Bureau NEW DELHI
THE economic slowdown will hamper the growth of the Indian retail sector for another 12-18 months, with lower sales and increasing liquidity pressure for many domestic retailers. Falling footfalls and poor conversion ratio have led to a decline in sales growth to 11% in December 2008 compared to 35% in December 2007, consulting firm KPMG said in a report.
In a survey conducted by KPMG, 70% of the respondents stated that the slowdown has adversely affected their footfalls. The consulting firm predicts that retailers would shift from lifestyle retailing to value retail in the coming months. This is expected to fuel action in food retailing and other FMCG products as the segment is insulated from the slowdown while home furnishing products are expected to lose favour of retailers.
Organised retail sector was expected to touch penetration levels of 16% by 2012, which has now been revised to 10.5%. Currently, the sector has a penetration level of about 5%. This dip can be largely attributed to the shaken sentiments of retailers. According to the report, many players are likely to close down unprofitable stores and rationalise expenditure in the next few months. Industry players are also expected to opt out of high-cost locations such as shopping malls and opt for low-rent premises. KPMG has suggested that retailers move to rural and remote areas as the metro circles are increasingly getting saturated.
In addition, the investment in the retail sector has also been delayed with several retail real estate development stalled. The organised retail sector was expected to attract investments of $25 billion over the next five years. According to KPMG report, a large number of retailers have not been able to meet their stated expansion plans. With higher cost of fund raising and a slowdown in demand, developers are likely to delay more projects in the future.
The Economic Times, April 1, 2009, Page 18
Our Bureau NEW DELHI
THE economic slowdown will hamper the growth of the Indian retail sector for another 12-18 months, with lower sales and increasing liquidity pressure for many domestic retailers. Falling footfalls and poor conversion ratio have led to a decline in sales growth to 11% in December 2008 compared to 35% in December 2007, consulting firm KPMG said in a report.
In a survey conducted by KPMG, 70% of the respondents stated that the slowdown has adversely affected their footfalls. The consulting firm predicts that retailers would shift from lifestyle retailing to value retail in the coming months. This is expected to fuel action in food retailing and other FMCG products as the segment is insulated from the slowdown while home furnishing products are expected to lose favour of retailers.
Organised retail sector was expected to touch penetration levels of 16% by 2012, which has now been revised to 10.5%. Currently, the sector has a penetration level of about 5%. This dip can be largely attributed to the shaken sentiments of retailers. According to the report, many players are likely to close down unprofitable stores and rationalise expenditure in the next few months. Industry players are also expected to opt out of high-cost locations such as shopping malls and opt for low-rent premises. KPMG has suggested that retailers move to rural and remote areas as the metro circles are increasingly getting saturated.
In addition, the investment in the retail sector has also been delayed with several retail real estate development stalled. The organised retail sector was expected to attract investments of $25 billion over the next five years. According to KPMG report, a large number of retailers have not been able to meet their stated expansion plans. With higher cost of fund raising and a slowdown in demand, developers are likely to delay more projects in the future.
Posts
No comments:
Post a Comment