With rising consumer demand and greater disposable income, the country's retail sector is projected to grow to US$ 700 billion, while organised business is expected to be 20 per cent of the total market by 2010, says a report.
According to the report prepared by global consultancy Northbridge Capital, the retail market, which is currently worth US$ 400 billion, is clocking an annual growth rate of 30 per cent.
"The market is expected to grow to US$ 700 billion by the end of 2010. Of the total retail market, the share of organised retail in 2008 is only 7.5 per cent, valued at US$ 300 million," the report said.
Noting that organised retail market is growing at the rate of 40 per cent, Northbridge Capital said that faster growth rate would be maintained in the next three years, especially with the entry of major global players and Indian corporate houses.
The retail sector comprises pharmacy, grocery, coffee, apparel, footwear and consumer durables chains.
At the current growth rate, organised retail is expected to touch US$ 60 billion by 2010. Further, the report pointed out, the Indian organised retail sector is estimated to grow to about 20 per cent of the total retail market by 2010.
"The growth of retail market in India is driven by consumer demand, which in turn is driven by increase in disposable income, increasing number of dual-income nuclear families, easy availability of credit, economic growth and so on," the report said.
Pointing out that currently, apparel is the "largest organised retail category," accounting for 39 per cent of the organised market, the report said it is growing at the rate of 12 to 15 per cent annually.
Further, the report noted, the organised apparel retail is projected to touch US$ 200 million by 2010 from the current worth of US$ 120 million.
Meanwhile, tier II cities like Noida, Amritsar, Kochi and Gurgaon, are emerging as the favoured destinations for the retail sector with their huge growth potential.
Rising disposable income coupled with lower real estate prices, as compared to metros, are among the major factors turning the tide in favour of tier II and smaller cities.
"...New retail malls, commercial complexes and townships are coming up in tier II cities along with infrastructure projects which is leading to the development of cities," Northbridge said.