The Centre, in a landmark judgement on Thursday, opened India's doors to foreign direct investment (FDI) in the retail sector, spelling a boon for retailers and customers alike.
The Centre, in a landmark judgement on Thursday, opened India's doors to foreign direct investment (FDI) in the retail sector, spelling a boon for retailers and customers alike. Cabinet has approved 51% FDI in multi-brand retail and increased the FDI cap for single brand retail to 100%.
Cynosure of retail giants, Ahmedabad, is expected to grow four-fold in the organised and unorganised retail sector. Experts believe that this boom will be led by the rising population in the city. FDI is also seen as contributor.
Bhagyesh Soneji, chairperson - The Associated Chambers of Commerce and Industry India (Assocham) believes the state has higher per capita income than most other states. "Looking at per capita income and per capita expenditure trends, Gujarat must be contributing 10% to 12% of country's total retail industry," she says.
Early inroads
Star Bazaar, a retail initiative by Tata Group, opened its first outlet in Ahmedabad eight years ago. Quite interestingly, it was India's first hypermarket.
According to industry experts, the city today has 'matured' where retail industry in concerned. Any national or international chain should be well prepared before setting foot at Ahmedabad.
According to Dr Prodipta Sen, executive director - marketing, corporate affairs and retail, Alpha G Corp, Amdavadis have a knack to choose best quality and services.
"…any national or international player will have to maintain high standards. Also, relaxed FDI norms (in retail) will bring better quality and brands to the consumer," believes Sen.
Jamshed Daboo, CEO - Trent Hypermarket and key conspirator behind setting up Star Bazaar says, "Before setting foot here (in Ahmedabad) we, for four years, tried to understand business and what people want. Gujaratis are not price-conscious, as is the myth. We have been receiving very encouraging responses from customers in Ahmedabad for past seven years. People here love to spend and buy more."
Creation of jobs
With the influx of retail majors, Gujarat will be exposed to better service, top notch quality and competitive pricing, says Mehul Choksi, CMD - Gitanjali Gems.
"Despite being a mature market, there is much more to happen in organised sector of Gujarat, especially in Ahmedabad and Surat.
However, for developing a store, procuring property is a major hurdle but if more retailers enter Gujarat in the near future, it will boost real estate. Also with niche players collaborating with Indian brands, we expect chains like Walmart and Carrefour to spread their presence and formats," said Choksi.
This move will generate employment and provide a boost to small and medium enterprises (SMEs), Choksi added.
"Reforms at the agricultural level, particularly land-related issues, are needed for growth in agriculture and food-processing sector. I welcome government's move to reserve a percentage of purchase from modern retail for SMEs as this will help them develop further," said Rasna's Piruz Khambatta, also chairman, CII national taskforce on processed food outsourcing.
Brand-aware Amdavadi
Amdavadis are slowly but surely warming up to brands. Speaking on the trend, Govind Shrikhande - customer care associate and managing director, Shoppers Stop Ltd says, "Amdavadi consumers are the savviest with clear focus on value and quality. People here love to buy and cook fresh food and visit the neighbourhood green grocer to meet their daily needs. With international chains setting shop here, consumers will a large assortment to choose from at reasonable prices," says Shrikhande.
Guj - Destination next
Future Group, one of the largest retail chains in the country, is always confident about Ahmedabad where retail business is concerned.
Kishore Biyani - chief executive officer, Future Group, who was in Ahmedabad recently, said that after opening Central, his company hasn't expanded any of its retail formats in the city.
"Everything will happen. There is still a lot of space for retail development in Ahmedabad and other cities of Gujarat. Other retail companies have retreated from the state while we have grown. Our retail business is growing much faster in Gujarat compared to other states," said Biyani.
"More than 60% population of India is rural while our (organised retail's) presence is very less. We have just started our rural operations and have observed a great demand for noodles! Now, they (noodles) are in demand all over the country."
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