Technology, Policies and Investments have been identified as three spokes of change of the wheel driving the India Retail scenario. With growth positioned right in the centre, major steps are being taken to make each of them stronger to influence the larger scheme of things.
Technology has been instrumental in the evolution of the Retail sector in India and it continues to reshape the sector in interesting and unexpected ways. Keeping consumer convenience and preference at the core, businesses are expected to spend significantly more on both their customer experience teams and technology that will allow them to understand their customers at a much deeper level. Robotics, drone delivery, anti-fraud tools for e-commerce and virtual/ digital assistants are just some on the many innovative technology tools that have the potential to make the future convenient and exciting.
The previous policies related to FDI in Single Brand Retail Trading (SBRT) allowed 49 per cent FDI under automatic route, and FDI beyond 49 per cent (and up to 100 per cent) through Government approval route. The decision to permit 100 per cent FDI under automatic route for SBRT is a massive step in transforming the way the retail business sets up shop and functions in the country. It has also been decided to permit single brand retail trading entity to set off its incremental sourcing of goods from India for global operations during initial five years.
Private equity (PE) players are back and are investing in retail real estate through investments in superior retail malls across cities (largely due to the limited supply of retail space across the country). About ?10,000 crore has been invested over last three years which has 93% share of pure equity. Surprisingly, over 58% of total investments in malls have been in Tier II cities, signalling at the growth potential in such cities.
PE investments include platform and entity-level deals as well as acquisition of stakes in leading malls. Prime examples being — Blackstone, which has set up a subsidiary, Nexus Malls — for managing its retail investments across Tier I as well as smaller cities as well as the CPPIB-Phoenix Mills partnership and the Xander-APG platform.
Discuss all this and much more at the CII India Retail Conclave 2018.