Organised retail to grow from 5 pc to 14-18% by 2015

MUMBAI: Organised retail in India is expected to expand from the current 5 per cent of the total market to 14-18 per cent of total retail and reach the $450-billion mark in size by 2015, a report released here said.

To evolve a profitable model, however, retailers would require an approach that is distinctive from the rest of the world, the report entitled `The Great Indian Bazaar: Organised Retail Comes of Age in India' by the retail practice of McKinsey & Company, said.

While the Indian market was a high-growth one, it was characterised by small transactions, rapidly-evolving customers with unique shopping habits and whose spending across categories was different from shoppers elsewhere.

To succeed here, the report referred to five ways in which retailers could create a profitable operating model.

They should integrate real estate into the business model, create an effective and scalable supply-chain and increase basket-size by shaping consumption, the report said.

Retailers should, further, develop and retain talent and influence regulation to ensure healthy development of the sector and to de-risk margins, it added.

"Driving consumption across categories is essential. We need to grow the basket-size per customer," McKinsey & Company's Partner and co-leader of the retail practice, Peter Haden, said.

Retailing in India would not succeed with the `cut and paste' global formats, the report said.