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Retail (Increased consumption, SSSG to drive growth)
Neutral
Year 2010 saw retailers closing down unviable stores and undertaking cost
rationalisation efforts to enhance profitability. Domestic demand started
picking up during H2FY10. Next year, we expect growing domestic
consumption, higher organised retail penetration (that stands at 4-5%) and
growth from metros and mini-metros to fuel growth in the retail sector.
Strong Indian demographics (rising per capita income & young median age)
will also aid spending growth.
⇒ Increasing same store sales growth: From the second half of FY10
we have seen that major retailers have posted a double digit
increase in same store sales (SSSG). This along with store additions
will drive revenue growth for retail companies
⇒ Catalyst: Opening up of the sector to FDI
⇒ Need of the hour: Equity funded growth (considering high debt),
efficient inventory management and investment in backend infra
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