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

Last Updated 26 September 2013, 14:39 IST

The fast growth in India's luxury retail space will push up the total retail market size to USD 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 and future prospects', property consulting firm Cushman & Wakefield (C&W) said India's total retail market is expected to exceed USD 650 billion by 2017 from USD 450 billion in 2013, which excludes online retailing.

"With the introduction of much-awaited reforms like FDI in multi-brand retail and progressive amendments, the country is expected to emerge as an attractive destination for global retailers," it said.

Over 50 per cent of the total income in India is earned by the top 20 per cent of the population and their monthly expenditure is twice that of the next lower bracket. By FY'17, this population bracket's earnings will increase by about 10 per cent and they will control 60 per cent of the income, the report maintained.

"Given that over the years, exposure, availability and enhanced spending capacities have created a noticeable demand for luxury goods, the scope for luxury retailers, including international ones, is expected to increase exponentially."

To meet the requirements of a host of incoming global retailers, more high-end malls catering to luxury retailers are expected to come up, C&W said.

"The luxury retail sector is not hit by the ongoing slowdown. Rather it has prospered indicating that the luxury industry is on a rising curve."

However, quality real estate, logistics and poor infrastructure, coupled with issues surrounding FDI rules and taxation, 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 price rise for luxury retail. Therefore, there is a need for rapid transformation of retail real estate in terms of availability and quality."

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(Published 26 September 2013, 14:30 IST)

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