Factors impacting purchase of private labels in India

Abstract

With a valuation of USD 672 billion and contributing to about 10% of GDP, the Indian retail industry has seen significant growth with some strong players entering the market. India, as the fifth largest destination in the global retail space, is growing at 12% per annum. The retail industry can be categorized as organized and unorganized. Unorganized retail constitutes 91% of the sector whereas organized retail constitutes 9% of the total. Although India has a low retail penetration compared to other countries like the United States, where it is 85%, the Indian economy is expected to grow 7.2% and 7.7% in FY18 and FY19, respectively, according to the International Monetary Fund (IMF). The retail industry is expected to grow at a compounded annual growth rate of 17% over the next four years, which would lead it to achieve USD 1300 billion by the end of 2020 according to India Brand Equity Foundation (IBEF). With many factors such as growing income levels, changing lifestyles and preferences, organized retail is growing at a fast pace. One of the emerging factors that has given a push to organized retail is the concept of private labels (Ratings 2017).