Jefferies: organised retail to grow, apparel market to benefit

A Jefferies report has predicted that the organised retail sector in India is set to grow significantly in the coming years and that the country’s apparel market will especially benefit from this growth.

A Jefferies report has predicted that the organised retail sector in India is set to grow, especially apparel - DLF Mall- Facebook

The global investment banking firm Jefferies, which was founded in 1962, has reported that organised retail currently only accounts for only seven percent of the Indian market. However, this percentage is set to rise in the coming years alongside a rise in per-capita income.  

"We believe that Indian organised retail is in a sweet spot,” said the report. “Especially post demonetisation and GST, given the under-penetration at 7 per cent of total trade and favourable macro." The report opined that it will be the apparel and grocery sections of the market that benefit the most form growth in the organised market in the coming years.

Organised retail means household brand names and a regulated market with standards in place and fixed pricing. This can benefit the consumer as trust is increased in pricing and quality but prices tend to be higher in the organised market and smaller businesses can suffer from consumer traffic being diverted to large chain stores.

The report cited India’s young population (with an average age of 28 years old) and increasing urbanisation as reasons why the organised market will continue to grow. "Organised retail is still in the midst of a secular growth journey with several segments on the cusp of strong growth as per capita income rises past the crucial USD 2,000 threshold that has heralded strong growth in most other markets," stated the report. 

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