3. CONTENTS
Impact of Retail on GDP
Introduction
Impact of Monetary
Policy
FDI
Impact of Fiscal Policy
Impact of Inflation
Impact of Covid
Suggestions
Employment Scenario
Government
Interventions
Way forward
Types & Statistics
4. Retail Sector
Involves Direct interface with the customer
and the coordination of business activities .
One of the fastest changing and dynamic
industries in the world today.
Culmination of many different processes
brought together to create sales.
How Does Retailing Work?
Rely on a system that supplies them with
merchandise to market to consumers.
Retail is highly influenced by consumer behavior,
the seasons, economic conditions, geography, and
many other factors.
To provide a unique shopping encounter, some
retailers offer services
All retail companies operate within a “macro environment,” or the sphere of influence
outside the company that shapes how companies do business.
5.
6. Indian Retail Market is one of the fastest-growing in the world.
Retail industry reached US$ 950 billion in 2018 at CAGR of 13% and is expected to reach
US$ 1.1 trillion by 2020
India is the fifth largest and preferred retail destination globally. The country is among
the highest in the world in terms of per capita retail store availability.
India is largely an unorganized retail market, contributing 92% to the total retail sector in
India.
India ranked 63 in the World Bank’s Doing Business 2020 publication.
India ranked 73 in the United Nations Conference on Trade and Development's Business-
to-Consumer (B2C) E-commerce Index 2019.
Online retail sales were forecast to grow 31% y-o-y to reach US$ 32.70 billion in 2018
Revenue of India’s offline retailers, also known as brick and mortar (B&M) retailers, is
expected to increase by Rs 10,000–12,000 crore (US$ 1.39–2.77 billion) in FY20.
Expected to become the world’s fastest growing E-commerce market.
STATISTICS
7. IMPACT OF RETAIL ON GDP
Retail is the largest among all industries accounting to 10 per cent of the country GDP .
For India, this share of private consumption stands at 58% of the country’s GDP. Of this 58% share of private
consumption in India’s GDP, 48% is contributed by merchandise retail (grocery, jewellery, fashion, electronics, home
improvement etc.) and 52% is contributed by services (education, healthcare, wellness, tourism, eating out etc).
On count in absolute terms, traditional retailing should contribute Rs 51.52 lakh crore of retail sales and ‘modern retail’
should account for the rest Rs 7 lakh crore in FY’20.
India’s merchandise retail has an outsized share of food and general (staples, groceries, FMCG, pharmacy etc.) retail that
stands at 70% of the total merchandise retail basket, implying Rs 40.95 lakh crore of estimated sales in FY 20.
0
20
40
60
PRIVATE CONSUMPTION
Merchandise Retail Services
8. The corporate tax cut to 22% from 30% will only benefit
companies in the organized retail sector.
TAXES
IMPACT OF FISCAL POLICY
CHANGE IN INCOME TAX SLABS-
The reduction of income tax in the slabs below 15 lakhs.
9. 51% FDI in E-Commerce In India is allowed in Multi-Brand Product Retail
(Online Presence Not Allowed) under government route
100% FDI allowed in e-commerce (B2B & Marketplace for B2C) under
automatic route
100% FDI allowed in Cash & Carry Wholesale Trading under automatic
route
100% FDI allowed under Duty-Free Shops under automatic route
100% FDI as per FDI policy on e-commerce allowed in Food Product Retail
under automatic route
Recent policy changes allow 100% FDI in e-commerce under the
automatic route for single-brand retail trading.
According to the Indian Retail, Trading has received Foreign Direct
Investment equity of 2.12 billion US$ during the period April-2000 to
March 2020.
Importantly the Indian Retail sector is able to obtain 970 million US$ from
different private equity funds in the year 2019.
FDI
12. IMPACT OF INFLATION
Consumer Price Index inflation stood at 7.61% in October, the highest since May
2014 compared with 7.27% in September.
The inflation in the vegetable segment was 20.73 per cent in September.
Inflation in food and beverages rose to 10.16% in October from 9.8% a month ago.
Retail Inflation in meat and fish rose 18.7% in October compared with a 17.6% rise in
September.
Clothing and footwear inflation stood at 3.17% compared with 2.97% in September.
Health inflation was at 5.22% against 4.9% in the previous month.
Housing inflation stood at 3.27% in October compared with 2.83% in September.
Household goods and services inflation stood at 2.83% against 2.9% in the previous
month.
13. UNEMPLOYMENT SCENARIO
“The retail sector is one of the most impacted sectors by the COVID-19 pandemic. Both essential and non-essential
retail has experienced unique effects on their businesses.
As per the Centre for Monitoring Indian Economy (CMIE), the Coronavirus crisis has led to a spike in the country’s
unemployment rate to 27.11 percent for the week ended May 3, up from the under 7 percent level before the start
of the pandemic in mid-March.
The rate of unemployment was the highest in the urban areas, which constitute the most number of red zones due
to the positive cases, at 29.22 percent, as against 26.69 percent for the rural areas.
This sector employs around 8 per cent of the workforce.
29.22
26.69
UNEMPLOYEMENT RATE
RURAL URBAN
14. GOVERNMENT INITIATIVES
All shopkeepers, retail traders and
self-employed persons are assured
of a minimum monthly pension of Rs
3,000/month after attaining the age
of 60 years. All of these with GST
turnover below Rs 1.5 crore and age
between 18-40 years, can enroll
themselves for this scheme
Launched with a view to assist retailers, the
government has floated the unique scheme
to encourage entrepreneurs to take
collateral-free loans for starting businesses
without the fear of defaulting.
CREDIT
GUARANTEE
FUND TRUST
Employees can purchase any
goods or services with a GST
rate of 12 per cent or above to
avail the benefit.
LTC CASH
VOUCHER
PENSION
SCHEME
Revised GST Slab rates and
A simplified return format
for GST is being introduced
from April 2020.
CHANGE IN
GST SLABS
15. -- When COVID-19 struck India, the economy was already down with almost all sectors
working at very slow pace.
The retail sector (is/was) one of the worst effected sectors in India. In the first two
months of lockdown, the retail sector had to bear losses of 90,000 crore rupees.
--The immediate impact of the outbreak included sudden surges in demand for
essential goods and services, a heightening of the healthcare and the financial crisis,
reduced employment opportunities, and a steep decline in demand for non-essential
goods and services.
--This pandemic has changed the consumer behavior. Health concerns have compelled
people to live differently, think differently and in many ways buy differently.
Consumers are looking at products and brands through a new lens.
--Retail stores saw reduced footfall almost throughout the year as many people
preferred online shopping as a more hygienic and safer way of shopping rather than
physically visiting the shops.
IMPACT OF COVID ON RETAIL SECTOR IN INDIA
16. WAY FORWARD FOR THE INDUSTRY
OFFLINE RETAIL INDUSTRY
Indian retailers will need to devise strategies for
the “now”, “next” and “beyond”.
Need to manage their costs through operational
improvement and by valuating the store portfolio.
Retailers need to ensure they are available to
their target audience for shopping not just through
big outlets
ONLINE RETAIL INDUSTRY
Penetration of Mobile connectivity and internet
would increase, more rural population would be
exposed to E commerce and thus the user base
of E commerce would also increase
Expected to surpass the US to become the
second largest e-commerce market in the world
by 2034.
Technology enabled innovations like digital
payments, hyper-local logistics and analytics
driven customer engagement.
17.
18. Establishment of Retailer Cooperatives.
Merger and Buyout of Weak Retailers.
Use of Technology to the greatest Extent
Possible.
Setting Up of more and more non retailing
stores.
Retailers must find out and satisfy service
outputs of the target Customers.
Setting Up of Franchisee Organization.
Suggestions
