Modern Retail Will
Face A Few Key Bottlenecks

  • India will witness a shortfall of almost million people in the retail sector by 2012
1. Talent

Given the expected investments and future projections of size of organized retail there is bound to be an explosion in employment opportunities in India with the retail sector requiring more than a million people over the coming five years to staff the front end of its operations.Taking an estimate of 30% extra people required for back-end, the direct employment generated by the organized retail sector in India over the coming five years can very well surpass the figure of 1.5 million direct jobs. Indirect employment generated on the supply side to feed this retail juggernaut will only add to this already high number. This is a boon for the Indian economy in terms of the employment creation potential of modern retail, at the same time a significant challenge for the organized retail industry in terms of getting access to such high number of trained manpower in a short period of time.

With more than US$ 30 billion in investments slated in the modern retail sector of India, the exponential growth will be tempered by three major constraints in the Indian context:

  1. Talent shortage
  2. Retail space shortage
  3. Lack of supplier base

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2. Retail Space
Similarly, another major constraint that growth of organized retail can expect is availability of quality retail space. With the expected investments, new retail space of around 500 million sq. ft. will be required, as per estimates, across all retail formats of which around 50% of the space would be required in malls. It is estimated that 76 million sq. ft. of additional mall space will be available 2007 end, and by 2010 end, 384 new malls are likely to emerge offering an area of over 115 million sq. ft. Even after factoring an increase of 20% new space available over the next year, the new mall space available would be around 140 million sq. ft . leaving a huge shortage of about 40% to meet the demand of 240 million sq. ft. by 2011. Also, there is heavy dependence on Metros and mini Metros, as far as mall developments are concerned. This is bound to create one of the biggest constraints in the growth of organized retail in India.

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    Retail Space Projections (mn. sq. ft.)

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3. Supplier base
With most of the supplier base in India geared to cater to the small scale industry and low farm holdings of an average of a hectare per farmer in India, large supermarket and hypermarket chains will find it highly challenging to identify sources of supply that provide them benefits of economies of scale, quality and consistency in offerings..

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