India ranked 5th most attractive for retail investment

Friday, 29 June 2012
India ranked 5th most attractive for retail investmentIn the list of most attractive destinations for retail investment, India has been ranked 5th and second in Asia after China by the US-based global management consulting firm A T Kearney in its study ‘Global Retail Development Index (GDRI)’. India’s ranking is among the 30 emerging nations that were studied. India scored high with an expected growth of 15-20 per cent in retail market over the next five years; 6-7 per cent growth in GDP; rapid urbanization and rising disposable income.

TheIndia ranked 5th most attractive for retail investment report reveals how online retail is changing International Retailers Global expansion strategies and presents an ecommerce index in which the developing markets holds the most potential for online growth. Since online retailing involves low-risk in testing new markets and complementing existing store footprints, it plays an important role in multichannel strategies. Although India is been ranked at 5th position in GRDI, owing to low internet penetration it is not ranked in the Ecommerce Index. However, e-commerce sales in India are much more than many top ranked nations in the ecommerce index. Out of the total India’s population of 1.2 billion, only 8 per cent uses the internet.

Hana Ben Shabat, Partner, A T Kearney points out that India’s underdeveloped infrastructure and cultural reservations are the main reasons for it not being able to make into the top 10 of A T Kearney’s ecommerce Index. There has been an increased use of air and rail ticketing sites, which, for a market like India, is a precursor for broader ecommerce usage. It is also been observed that mobile and smartphone penetration rates have increased as many users are switching to smartphones for internet and mobile shopping.

However, A T Kearney believes that adjusting websites, payment methods like offering cash-on delivery or payment at door via card, shipping options, and business models according to the market needs will help India to grow its online retail business.