Retail in India and China

WSJ outlines the differences:

Sales of high-volume packaged goods in urban China grew 9% from a year earlier to $13.6 billion in the year ended April 30, while sales of similar goods in urban India grew just 2.2% to $7.36 billion. ACNielsen tracks retail sales in most key towns and cities in both countries on a continuing basis.

India’s retail sector, which is still dominated by mom-and-pop stores and has few modern shopping malls, has stifled the industry from keeping pace with its counterpart in booming China, according to Russell Farmery, ACNielsen’s managing director for India. Modern retail outlets account for 46% of fast-moving consumer goods sold in Chinese cities, in terms of value. In India, modern stores account for 7% of urban sales.

The disparity in growth rates for the consumer items surveyed is notable, in particular, because China and India both recorded among the world’s highest rates of economic growth in the past year. China’s inflation-adjusted gross domestic product expanded 9.1% in 2003, while India’s economy grew 8.2% in the year ended March 31.

According to retail business analysts, consumers tend to buy more when they shop at “modern trade channels,” such as hypermarkets, supermarkets and retail chains, which offer a wider selection, slicker marketing, a more pleasant shopping experience and — most importantly — cheaper prices.

But such outlets are few in India.

There is another reason retail receipts in India haven’t grown much. Feisty local competitors of foreign-run manufacturers such as Proctor & Gamble Co. of the U.S. and Hindustan Lever Ltd., the Indian unit of Anglo-Dutch company Unilever PLC, have also driven down prices of everyday products such as shampoo and toothpaste in the past few years.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.