India's tier I & II cities have potential to see opening of 300 new hypermarkets by 2011 as people are increasingly inclining towards more convenience and availability of products at one shop.
The Associated Chamber of Commerce and Industry (ASSOCHAM) has completed a study along with KPMG in which they have discovered that Indian cities (tier-I and and tier-II) hold strong potential to see opening of 300 new hypermarkets by 2011, as reported by The Economic Times.
According to the study "Reinventing India's Retail Sector", "Even in 2008, 212 towns had sufficient market potential for hypermarkets for break-even existence; it is a different matter that this potential is yet to be realized."
In fact, opening of five or more hypermarkets in every city is possible in the current year (2009) given the fact that the number of households, their disposable income and consumption are increasing in urban India, especially in 25 leading cities. By 2011, this number is projected to rise to 52 as some tier III cities will also be capable to have five or more hypermarkets to meet people's demand.
Moreover, retailers planning to venture into smaller towns are anticipated to increase their store space in the range of 25,000-30,000 Sq ft in high street locations. However, the building of malls will remain confine to tier I & II cities in the coming 3-5 years.
RNCOS, a leading market research firm, has said in its research report "Booming Retail Sector in India" that the Indian organized retail industry has been growing at an annual growth rate of 20% for past few years, and is giving fillip to mall construction activities to further expand chains of hypermarkets throughout the country. With this growth rate, the organized retail market will mount to US$ 50 Billion by 2011.
The report further reveals that hypermarkets and convenience stores will see the bulk of retail industry investments because of their huge popularity among customers who easily get a wide range of products under one roof without hassles.
A Research Analyst at RNCOS said: "Although the prospects of Indian retail industry seem bright, a number of facts has to be taken into consideration in order to initiate positive growth momentum and to ensure sustainable growth. The toughest challenge for the organized retail industry is intense competition from unorganized retail sector. Indians still opt for the traditional retailing method as it is deeply rooted in their mind. However, large discount stores such as hypermarkets and supermarkets will witness strong growth against other formats in coming years."
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