Commencement: April 2009
Completion: March 2010
The global slowdown, lower domestic demand and restrictions on foreign direct investment had slowed down the growth rate of organised retailing in India in mid-2008. Faced with saturated markets in their home countries, several foreign retailers were evaluating investment possibilities in large emerging markets like India. However, the credit crunch in the aftermath of the financial crisis and uncertainties regarding the regulatory framework for such investment in India had resulted in putting investment plans on hold. This has come about at a time when Indian companies had shown interest in entering into financial and technical collaborations with international retailers.
This study analysed the opportunities and concerns of foreign, especially Italian, retailers in India in eight sectors after the global slowdown. The sectors included clothing and fashion accessories, shoes and leather goods, jewellery, food and grocery, health and wellness products, kitchenware and home appliances and home furnishing, sportswear and fitness goods and gift and stationery items. Specifically, it analysed the retail and other policies relating to each sector, the production, distribution and supply chain, different retail formats, modes of entry and operation of foreign retailers, their impact on the traditional sector and consumer shopping behaviour.
The study found that although FDI is not allowed in multi-brand retail, foreign retailers have established a presence in India through various routes. Entry of foreign retailers has increased sourcing from India. The impact of foreign retailers on traditional or small retailers depends not only on their presence but also on their form of operation, business strategy and expansion plans.
The study found that although modern retail is growing at a fast pace, retailers face a number of barriers in India, which not only adversely affect their expansion but also manufacturing and allied sectors. The study suggests some strategies to overcome such barriers.