In 2007, the Chinese and Indian retail markets together were worth about $1 trillion. By 2012, that figure will jump to $1.7 trillion as increased prosperity delivers greater spending power, creating hundreds of millions of new consumers in the process.
But the two big Asian markets are at different stages of development. "Modern" or "organized" retail has 20% of the total retail spent in China, while in India, the figure is just 4%. The comparable figure for the United States is 85%.
The world’s two biggest international retailers, Wal-Mart and Carrefour, have been operating in China for years, but are yet to gain much traction in India. Both retailers plan to have Indian wholesale operations by 2008-09.
India’s modern retail sector is growing much faster than traditional retail. But because it is starting from such a small base, it will not match the size of traditional retail for perhaps 20 years.
Even so, the Indian opportunity is luring many new entrants. They include such big Indian names as Reliance, Bharti and Birla, who are gearing up for battle against incumbents in India’s store wars.
Like their counterparts in China, Indian retailers face big challenges. There is a global war for talent, a desperate need for efficient supply chains, and both China and India must deal with the political sensitivities of vast rural hinterlands.
Geoff Hiscock's new book, India's Store Wars is now available from Wiley Books. With a population fast approaching 1.2 billion and an economy that will likely double in size by 2015, India is destined to become one of the largest consumer markets in the world. In the coming decade, as many as 500 million people, newly released from living on or just above the poverty line, will start to buy goods and services in significant quantities for the first in their lives. How and where will these people spend their money? India Store Wars explores the tensions at play as the next 500 million consumers gradually work their way up from the bottom of the pyramid.
Geoff Hiscock has been writing about Asian business for more than 30 years from bases in Hong Kong, Tokyo, Bangkok and Sydney. He is the author of India’s Global Wealth Club (2007), which documents India’s 21st century resurgence and profiles the richest Indian tycoons around the world. He also wrote the hugely successful Asia’s Wealth Club (1997) and its follow-up, Asia’s New Wealth Club (2000), the key books which first brought many of the region’s billionaires to an international audience. He served as Sydney bureau chief and Asia Business Editor for CNN.com Asia Pacific from 2001-2006, and as International Business Editor of The Australian daily newspaper from 1995-2000. His next book, due out in the second half of 2008, focuses on one of the most dynamic parts of the Indian business scene, the retail sector.