Luxury to drive retail growth, but poor infra may spoil party

Fast growth in India’s luxuryretail space will push up the total retail market size to $650 billion by 2017, a report said but it warned lack of quality real estate may put spanners in this expansion.

In a report titled ‘Luxury retail: Evolution andfuture prospects’, property consulting firm Cushman &Wakefield (C&W) said India’s total retail market is expectedto exceed$650 billion by 2017 from $450 billion in2013, which excludes online retailing.

“With the introduction of much-awaited reforms like FDI inmulti-brand retail and progressive amendments, the country isexpected to emerge as an attractive destination for globalretailers,” it said.

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Over 50 percent of the total income in India is earned bythe top 20 percent of the population and their monthlyexpenditure is twice that of the next lower bracket. By FY'17,this population bracket’s earnings will increase by about 10percent and they will control 60 percent of the income, thereport maintained.

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“Given that over the years, exposure, availability andenhanced spending capacities have created a noticeable demandfor luxury goods, the scope for luxury retailers, includinginternational ones, is expected to increase exponentially.”

To meet the requirements of a host of incoming globalretailers, more high-end malls catering to luxury retailersare expected to come up, C&W said.“The luxury retail sector is not hit by the ongoingslowdown. Rather it has prospered indicating that the luxuryindustry is on a rising curve.”

However, quality real estate, logistics and poorinfrastructure, coupled with issues surrounding FDI rules andtaxation, are some of the roadblocks in growth of the sector,which also faces lack of trained manpower, the report said.Availability of quality retail space is limited to just a

few cities and that too in very small percentage, it noted.“This shortage of good quality supply will result in pricerise for luxury retail. Therefore, there is a need for rapidtransformation of retail real estate in terms of availability and quality.”

PTI