Report On 5 Year Plan of BMI

Q2 2014
www.businessmonitor.com
BMI INDIA RETAIL REPORT
INCLUDES 5-YEAR FORECASTS TO 2018
ISSN 2040-9109
Published by:Business Monitor International
BMI India Retail Report Q2 2014
INCLUDES 5-YEAR FORECASTS TO 2018
Part of BMIs Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline:
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CONTENTS
BMI Industry View ............................................................................................................... 7
SWOT .................................................................................................................................... 9
Political ................................................................................................................................................. 11
Economic ............................................................................................................................................... 13
Industry Forecast .............................................................................................................. 15
Headline Retail Forecast .......................................................................................................................... 15
Table: Total Household Spending, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Table: Retail Sector Spending (%), 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Table: Headline Retail Sector Spending, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Table: Retail Sector Spending As % Of GDP, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Retail Sector Forecast .............................................................................................................................. 22
Food, Drink And Tobacco ........................................................................................................................ 23
Table: Food, Drink And Tobacco Spending, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Clothing And Footwear ........................................................................................................................... 24
Table: Clothing and Footwear Spending, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Household Goods ................................................................................................................................... 25
Table: Household Goods Spending, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Personal Care ....................................................................................................................................... 26
Table: Personal Care Spending, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Household Numbers And Income Forecast ................................................................................................... 28
Table: Household Data, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Demographic Forecast ............................................................................................................................. 31
Table: Total Population, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Table: Population: Babies, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Table: Population: Young Children, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Table: Population: Children, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Table: Population: Young Teens and Older Children, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Table: Population: Young People, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Table: Population: Older Teenagers, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Table: Population: 21yrs +, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Table: Population: Young Adults, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Table: Population: Middle Aged, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Table: Population: Urban, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Macroeconomic Forecasts ............................................................................................... 36
Table: India - Economic Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Industry Risk Reward Ratings .......................................................................................... 41
Asia Risk/Reward Ratings ......................................................................................................................... 41
Table: Asia Retail Risk Reward Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Industry Risk/Reward Ratings .................................................................................................................... 41
Business Monitor International Page 4
Rewards ............................................................................................................................................... 41
Risks .................................................................................................................................................... 42
Market Overview ............................................................................................................... 43
Retail Subsectors ................................................................................................................................... 46
Tourism ................................................................................................................................................ 48
Competitive Landscape .................................................................................................... 50
Department Store Groups ........................................................................................................................ 50
Future Group ........................................................................................................................................ 50
Lifestyle International ............................................................................................................................. 50
MGR ................................................................................................................................................... 50
Pantaloon Retail .................................................................................................................................... 51
Tesco ................................................................................................................................................... 51
Fashion ................................................................................................................................................ 51
Bata .................................................................................................................................................... 52
Marks & Spencer Reliance India ............................................................................................................... 52
Glossary ............................................................................................................................. 53
Methodology ...................................................................................................................... 60
Industry Forecast Methodology ................................................................................................................ 60
Sources ................................................................................................................................................ 63
Risk/Reward Rating Methodology ............................................................................................................. 63
Table: Retail Risk/Reward Ratings Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
BMI Industry View
BMI View: An emerging middle class and an expanding 21-plus years age group resulting in a strong rise
in household spending across all retail subsectors means that India's retail sector is forecast to grow
strongly over the next few years. We are particularly positive about the future growth prospects for
communications, personal care & insurance, and clothing & footwear spending. However, we expect food
and drink expenditure to remain the highest throughout our forecast period, with spending on transport and
housing also high.
The new India Retail Report provides an extensive forecast of various retail indicators, including household
spending and headline total spending across each retail subsector, household income and employment
forecasts, demographic forecasts, and a detailed breakdown of household and per capita spending across a
large number of retail areas including food & drink; clothing & footwear; furnishing & home; recreation &
culture; personal, insurance & other, and a number of other subsectors.
Overall, we see long-term potential in the local consumer market, particularly for non-essential items
and aspirational purchasing by an emerging middle class. We forecast the average net household income to
be US$6,725 in 2014, with the great majority of households falling into the bottom wage bracket of US
$5,000+. However, between 2014 and 2018, the percentage of households in the US$10,000+ wage bracket
is forecast to rise from 10.0% to 25.6% of the total, which represents the key demographic for increased
household spending on luxury items beyond necessities such as food, utilities and transport. We expect this
to result in a corresponding increase in household spending on personal care and effects, high-end
household appliances, restaurants and entertainment. Meanwhile, transport expenditure will also continue to
rise as a larger number of households purchase cars and bikes and travel longer distances, including the
purchase of holiday flights.
However, starting with the sell-off in the rupee, economic headwinds have accumulated quickly in India,
forcing us to downgrade our real GDP growth expectations. The rupee's performance and the harsh response
it has forced the central bank to enact suggest to us that private domestic demand will be much weaker than
previously anticipated. We now see full-year real GDP growth remaining flat at 5.0% for FY2013/14
(April-March).
Recent Developments Include: The UK's Tesco has received the go-ahead to invest US$110mn in a joint
supermarket venture with the Tata Group conglomerate. The newly elected Delhi government led by the
Aam Aadmi Party has been widely criticised for its withdrawal of approval for foreign direct investment in
multi-brand retail in Delhi. TUI Travel India has opened its sixth retail store in India, and its first in
Mumbai.
Key BMI Forecasts:
We expect total household spending to be US$1,204bn in 2014.
Food & non-alcoholic drinks spending will reach US$345.2bn in 2014, while personal, insurance & other
spending will top US$196bn.
Household numbers will exceed 259mn in 2014, representing 1.6% growth y-o-y, and should reach
275mn by 2018.
In our Risk/Reward Ratings, India scores an overall rating of 47.52, putting it seventh and last in the
region, hampered by low household spending per capita and poor infrastructure.
SWOT
SWOT Analysis

Strengths

A cheap, skilled, English-speaking workforce can perform the jobs of Western
workers for a fraction of the wages paid in North America or Europe.
India's strict foreign direct investment regulations have been relaxed somewhat, and
international companies, such as the UK's Tesco, are gradually taking an interest in
the country.
A growing middle class is boosting household spending, especially with regard to

non-essential 'luxury' goods and aspirational purchases.
Weaknesses

The competitiveness of local firms is undermined by official red tape, from
foreign investment restrictions to inflexible labour laws.
The rural population of India represents around 68% of the total, while almost 37% is
classified as not economically active by the UN. This is a major obstacle for retailers
seeking to rapidly expand their customer base.
The number of households in the lowest wage bracket remains high, and continues
to inhibit non-essential household spending.
Opportunities

India could enhance the competitiveness of the local industry through further
liberalisation and deregulation.
Prime Minister Manmohan Singh is eager to reform the banking sector to increase
the availability of long-term financing, particularly for large infrastructure projects,
including those in the retail sector.
Personal, insurance and other spending is forecast to increase by an average 12.4%

between 2014 and 2018, when it will be worth an estimated US$308bn.
Threats

There is incomplete support for the 2012 relaxation of India's strict foreign
direct investment regulations, with the newly elected Delhi government led by the
Aam Aadmi Party withdrawing approval for liberalisation in Delhi.
SWOT Analysis - Continued
Poor physical and labour infrastructure in India poses challenges for global retail
groups looking to expand their presence.
Political
Political SWOT Analysis

Strengths

India is the world's largest democracy. A secular constitution, framed in 1950,
officially guarantees justice, liberty and equality while aiming to promote fraternity
among the citizenry. More than 1,000 political parties registered for the April-May
2009 general elections, competing for the preference of India's 714mn eligible voters.
Despite its multitude of problems, India has generally managed to avoid hard
authoritarian rule or military coups, which have happened in many other developing
countries, including India's neighbours Bangladesh, Myanmar, and Pakistan.
Weaknesses

Large coalition governments complicate policymaking at the centre as coalition
partners and outside parties pursue their own agendas. The competence of state
government varies enormously across India's 35 states and union territories.
India's tense relationship with Pakistan still weighs on regional stability. The two
countries have gone to war three times since they were 'partitioned' on independence
from British rule in 1947.
Issues such as the ineffectiveness of the executive and judiciary in controlling

underhand practices, the apparent arbitrary allocation of government licences, and
the uneasy influence of special interest groups remain key investor concerns.
Opportunities

India has in recent years edged closer to the US in foreign policy. Both the US and
India are democracies and face threats from militant Islamists; this, combined with the
presence of a 2mn-strong affluent Indian diaspora in the US, is bringing the two
countries closer together.
Thawing relations with Pakistan has made it easier for the parties to defuse potentially
explosive situations, such as the Mumbai attacks in November 2008, which
Islamabad acknowledges were planned and launched from its territory.
Threats

India's growing regional rivalry with China, if unchecked, could lead to a more hostile
regional outlook.
Political SWOT Analysis - Continued
India has experienced a series of serious terrorist attacks over the past few years,
perpetrated by radical Islamist and rural Maoist groups. The surge in Naxalite attacks
has also raised the spectre of further violence.
Economic
Economic SWOT Analysis

Strengths

India has a very large domestic market, and rising domestic demand is a major driver
of economic growth.
A vast supply of inexpensive but skilled labour has turned India into the back office of
the world. Around half of the population is younger than 25.
Weaknesses

Despite rapid economic growth, India remains a very poor country. According to BMI
estimates, India's GDP per capita was roughly US$1,650 in 2012, a third of the size of
China's.
Agriculture remains inefficient, and poor monsoon rains can slash rural incomes and
consumption. Two-thirds of the population depend on farming for their livelihood.
India runs chronic trade and fiscal deficits, both of which are near historic highs. The
government spends a significant part of its revenue on interest payments, subsidies,
salaries, and pensions. This limits the amount of money available for infrastructural
improvements.
Opportunities

India's emerging middle class will continue to drive demand for new goods and
services. A wealthier society, combined with tax reforms, would serve to boost
revenue receipts, relieving fiscal pressure.
The government has implemented some tax reforms. A uniform goods and services
tax to be implemented in the near future should help boost compliance, thereby
raising government revenue.
With Chinese labour costs rising aggressively, India may well enjoy a manufacturing
boom in the coming years as multinational look to take advantage of a young,
competitive workforce and major transport network improvements.
Threats

India's dependency on oil imports is problematic. This undermines the trade balance
and makes India vulnerable to energy price-driven inflation.
Economic SWOT Analysis - Continued
India is at risk of severe environmental problems. Many of its cities' air and rivers are
heavily polluted, raising questions about the sustainability of the economy's rapid
growth.
Industry Forecast
Headline Retail Forecast
BMI View: A more sophisticated retail landscape of chain and speciality stores is beginning to replace the
traditional Indian 'unorganised' market consisting of local kirana, paan and beedi (corner) shops. Although
the massive sell-off in the rupee has forced us to downgrade our real GDP growth expectations (we now see
full-year real GDP growth remaining flat at 5.0% in FY2013/14), we are still constructive towards the unit
over the medium term. Retail groups' investment strategies are being driven by increasing consumer
demand due to strong underlying economic growth, population expansion, an emerging middle class with
greater levels of disposable income, and the rapid construction of organised retail infrastructure.
Domestic and foreign players are increasingly challenging the dominance of the country's traditional 'mom
and pop' stores by opening modern outlets. Growing consumer spending power and a pattern of steady
economic growth likely to reassert itself over the medium term are key factors behind the forecast rise in
India's retail sales, with increasing liberalisation of foreign investment regulations likely to result in
household spending on the retail sector increasing by an average 11.3% annually between 2014 and 2018,
from US$1,204bn to US$1,820bn by the end of our forecast period.
Rising Expenditure Boosts Retail Sector
Total Household Spending (US$bn) (% chg) 2000-2018
Total household spending, US$bn (LHS)
Total household spending, US$ % y-o-y (RHS)
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
e
2
0
1
2
e
2
0
1
3
e
2
0
1
4
f
2
0
1
5
f
2
0
1
6
f
2
0
1
7
f
2
0
1
8
f
0
500
1,000
1,500
2,000
-10
0
10
20
30
Source: National Statistics, BMI
An important boost to consumer spending is the emergence of a powerful, more discerning middle class,
with more money to spend on non-food purchases, and greater exposure to brands. However, we are
projecting real private consumption growth to edge lower for the third straight year to 3.5% from 4.0% in
FY2012/13, which could impinge on purchasing power over the short term. Moreover, income inequality in
India remains serious, with 49% of households in the lowest income bracket of US$5,000+ in 2014.
Table: Total Household Spending, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Total household spending, INRbn 50,663 57,058 62,894 69,835 77,357 85,680 94,900 104,617
Total household spending, US$bn 1,085 1,068 1,066 1,204 1,366 1,505 1,659 1,820
Total household spending, % of GDP 59.15 51.39 59.44 59.13 59.02 59.00 58.93 58.60
Total household spending, US$ % y-o-y 13.83 -1.60 -0.19 12.95 13.43 10.21 10.21 9.69
Total household spending, US$ per capita 889 864 851 950 1,065 1,160 1,265 1,373
Total household spending, US$ per household 4,400 4,249 4,172 4,636 5,176 5,617 6,109 6,616
National Statistics, BMI
Nevertheless, we forecast total household spending to grow by an average of 11.3% y-o-y between 2014
and 2018. This represents an increase from US$1,204bn in 2014 to US$1,820bn by 2018. Moreover,
household spending within the retail sector will continue to account for around 59% of overall GDP for
India, a vast figure emphasising the importance of the sector as a whole.
Table: Retail Sector Spending (%), 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Food and non-alcoholic drinks spending, % total 30.3 29.7 29.2 28.7 28.2 27.8 27.4 27.1
Alcoholic drinks and tobacco spending, % total 3.1 3.1 3.1 3.1 3.1 3.1 3.2 3.2
Clothing and footwear spending, % total 7.4 7.5 7.6 7.7 7.8 7.8 7.9 8.0
Housing and utilities spending, % total 13.4 13.5 13.6 13.6 13.7 13.7 13.7 13.8
Furnishing and home spending, % total 4.1 4.1 4.2 4.2 4.2 4.3 4.3 4.3
Health spending, % total 3.9 3.8 3.8 3.8 3.7 3.7 3.7 3.7
Transport spending, % total 15.6 15.8 15.9 16.0 16.1 16.1 16.2 16.3
Communications spending, % total 1.8 1.8 1.8 1.9 1.9 1.9 1.9 2.0
Recreation and culture spending, % total 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3
Education spending, % total 1.3 1.2 1.2 1.2 1.2 1.1 1.1 1.1
Restaurants and hotels spending, % total 2.3 2.3 2.3 2.4 2.4 2.4 2.4 2.4
Personal, insurance and other spending, % total 15.6 15.9 16.1 16.3 16.5 16.7 16.8 16.9
The majority of household spending is focused on four main categories which account for the lion's share of
the household budget, and will continue to do so throughout our forecast period. These are food and non-
alcoholic drinks spending, which accounts for almost 29% of the total in 2014, though this will see a
moderate decline over the next few years to 27.1% as spending on non-essential items increases; personal,
insurance and other spending, which represents 16.3% of total household expenditure; transport, which
accounts for 16.0% of the total; and housing and utilities spending, which represents another 13.6% of
overall household spending. In 2014, we believe these four sectors will represent 74.6% of total household
expenditure in India.
Total household expenditure for the aforementioned four sectors will amount to almost US$898bn,
according to our 2014 forecasts. Food and non-alcoholic drinks spending will see steady growth, of 9.7% y-
o-y throughout the forecast period, as the MGR sector continues to develop. However, alcoholic drinks and
tobacco spending is set to outstrip that of food and non-alcoholic drinks, growing at an average 11.8%
annually, as a more affluent and westernised population not only spends more in supermarkets and higher-
end liquor stores, but also frequents bars and clubs and purchases more expensive alcoholic drinks.
Food Takes Lion's Share Of Household Budget
Household Spending By Sector (%) 2014
Source: BMI
Personal, insurance and other spending is forecast to grow by a substantial 12.4% y-o-y between 2014 and
2018 as a more affluent consumer base leads to more 'aspirational' purchasing habits. Expenditure on
clothing and footwear is forecast to increase at the same rate, with fashion high on young Indians' radar. The
same demographic (the 20-39 year old young adult population is expected to reach an enormous 433mn by
2018) is likely to lead to a 12.2% average annual increase in furnishing and home spending; while
communications is forecast to enjoy the highest rate of growth, at an average annual 12.8% between 2014
and the end of our forecast period in 2018.
Table: Headline Retail Sector Spending, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Food and non-alcoholic drinks
spending, INRbn 15,375 16,925 18,342 20,020 21,833 23,835 26,046 28,374
spending, US$bn 329.4 316.8 310.9 345.2 385.5 418.7 455.3 493.5
spending, US$ % y-o-y 10.2 -3.8 -1.9 11.0 11.7 8.6 8.7 8.4
Alcoholic drinks and tobacco spending,
INRbn 1,546 1,755 1,946 2,173 2,420 2,693 2,995 3,314
US$bn 33.1 32.9 33.0 37.5 42.7 47.3 52.4 57.6
US$ % y-o-y 15.2 -0.8 0.4 13.6 14.0 10.7 10.7 10.1
Clothing and footwear spending, INRbn 3,725 4,270 4,766 5,357 5,999 6,710 7,499 8,331
Clothing and footwear spending, US
$bn 79.8 79.9 80.8 92.4 105.9 117.9 131.1 144.9
Clothing and footwear spending, US$
% y-o-y 16.8 0.1 1.1 14.4 14.7 11.3 11.2 10.5
Housing and utilities spending, INRbn 6,804 7,704 8,525 9,503 10,562 11,736 13,036 14,407
Housing and utilities spending, US$bn 145.8 144.2 144.5 163.8 186.5 206.2 227.9 250.6
Housing and utilities spending, US$ %
y-o-y 14.7 -1.1 0.2 13.4 13.8 10.6 10.5 10.0
Furnishing and home spending, INRbn 2,067 2,359 2,626 2,943 3,287 3,669 4,092 4,538
Furnishing and home spending, US$bn 44.3 44.2 44.5 50.7 58.0 64.5 71.5 78.9
Furnishing and home spending, US$ %
y-o-y 16.1 -0.3 0.8 14.0 14.4 11.0 11.0 10.3
Health spending, INRbn 1,955 2,180 2,385 2,630 2,894 3,186 3,510 3,850
Health spending, US$bn 41.9 40.8 40.4 45.3 51.1 56.0 61.3 67.0
Health spending, US$ % y-o-y 12.2 -2.6 -0.9 12.1 12.7 9.6 9.6 9.2
Transport spending, INRbn 7,922 8,998 9,979 11,148 12,416 13,820 15,375 17,016
Transport spending, US$bn 169.7 168.4 169.1 192.2 219.2 242.8 268.8 296.0
Transport spending, US$ % y-o-y 15.3 -0.8 0.4 13.6 14.0 10.8 10.7 10.1
Headline Retail Sector Spending, 2011-2018 - Continued

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Communications spending, INRbn 897 1,033 1,158 1,307 1,468 1,647 1,846 2,055
Communications spending, US$bn 19.2 19.3 19.6 22.5 25.9 28.9 32.3 35.8
Communications spending, US$ % y-
o-y 17.9 0.7 1.5 14.8 15.1 11.6 11.5 10.8
Recreation and culture spending,
INRbn 669 747 819 904 996 1,098 1,210 1,329
Recreation and culture spending, US
$bn 14.3 14.0 13.9 15.6 17.6 19.3 21.2 23.1
Recreation and culture spending, US$
% y-o-y 12.5 -2.4 -0.8 12.3 12.8 9.7 9.7 9.3
Education spending, INRbn 644 703 757 821 890 965 1,049 1,137
Education spending, US$bn 13.8 13.2 12.8 14.2 15.7 17.0 18.3 19.8
Education spending, US$ % y-o-y 8.9 -4.6 -2.5 10.3 11.0 8.0 8.1 7.8
Restaurants and hotels spending,
INRbn 1,146 1,312 1,463 1,643 1,839 2,055 2,295 2,549
Restaurants and hotels spending, US
$bn 24.6 24.6 24.8 28.3 32.5 36.1 40.1 44.3
Restaurants and hotels spending, US$
% y-o-y 16.6 0.0 1.0 14.2 14.6 11.2 11.1 10.5
Personal, insurance and other
spending, INRbn 7,913 9,071 10,127 11,386 12,753 14,267 15,946 17,718
spending, US$bn 169.5 169.8 171.6 196.3 225.1 250.6 278.7 308.2
spending, US$ % y-o-y 16.9 0.2 1.1 14.4 14.7 11.3 11.2 10.6
Expenditure on health and on education will also grow strongly throughout the forecast period, by an
average 10.6% y-o-y and 9.0% respectively, as Indian spending habits increasingly mirror those in more
developed countries. Recreation and culture and restaurants & hotel spending are likely to follow the same
trend, as more Indians move into the middle-income bracket and have more disposable income to spend on
entertainment. Expenditure on the former category is forecast to rise from US$15.6bn in 2014 to US$23.1bn
by 2018, while spending on restaurants and hotels is expected to increase from US$28.3bn to US$44.3bn
over the same period.
Table: Retail Sector Spending As % Of GDP, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Food and non-alcoholic drinks spending, % of GDP 18.0 15.2 17.3 17.0 16.7 16.4 16.2 15.9
Alcoholic drinks and tobacco spending, % of GDP 1.8 1.6 1.8 1.8 1.8 1.9 1.9 1.9
Clothing and footwear spending, % of GDP 4.3 3.8 4.5 4.5 4.6 4.6 4.7 4.7
Housing and utilities spending, % of GDP 7.9 6.9 8.1 8.0 8.1 8.1 8.1 8.1
Furnishing and home spending, % of GDP 2.4 2.1 2.5 2.5 2.5 2.5 2.5 2.5
Health spending, % of GDP 2.3 2.0 2.3 2.2 2.2 2.2 2.2 2.2
Transport spending, % of GDP 9.2 8.1 9.4 9.4 9.5 9.5 9.5 9.5
Communications spending, % of GDP 1.0 0.9 1.1 1.1 1.1 1.1 1.1 1.2
Recreation and culture spending, % of GDP 0.8 0.7 0.8 0.8 0.8 0.8 0.8 0.7
Education spending, % of GDP 0.8 0.6 0.7 0.7 0.7 0.7 0.7 0.6
Restaurants and hotels spending, % of GDP 1.3 1.2 1.4 1.4 1.4 1.4 1.4 1.4
Personal, insurance and other spending, % of GDP 9.2 8.2 9.6 9.6 9.7 9.8 9.9 9.9
Retail Sector Forecast
BMI View: As rising numbers of affluent Indians choose to spend their disposable income on aspirational
products, the expansion of the country's organised retail market is leading to increased spending on non-
food, non-essential items. India's healthy young adult population (aged 20-39 yrs), which stands at an
enormous 414mn and is forecast to increase to 433mn by 2018, is driving demand for consumer goods,
particularly communications, personal care, clothing and footwear, and furnishing & home. However, food
and non-alcoholic drinks is still the highest-spending category, with transport and housing and utilities also
accounting for significant household expenditure.
Starting with the sell-off in the rupee, economic headwinds have accumulated quickly in India, forcing us to
downgrade our real GDP growth expectations. The rupee's performance and the harsh response it has forced
the central bank to enact suggest to us that private domestic demand will be much weaker than previously
anticipated. We now see full-year real GDP growth remaining flat at 5.0% for FY2013/14 (April-
March). However, despite its recent poor performance, we are constructive towards the rupee over the
medium term, and expect consumers' purchasing power to rise over our forecast period.
Food And Fashion Dominate
Total Household Spending By Sector (US$bn) 2011-2018
Alcoholic drinks and tobacco spending~ US$bn (LHS)
Household goods spending, US$bn (LHS)
Personal care and effects spending, US$bn (LHS)
Food and non-alcoholic drinks spending~ US$bn (LHS)
Clothing and footwear spending, US$ per household (LHS)
2
0
1
1
e
2
0
1
2
e
2
0
1
3
e
2
0
1
4
f
2
0
1
5
f
2
0
1
6
f
2
0
1
7
f
2
0
1
8
f
0
500
250
750
Source: National Statistics, BMI
Our forecasts are for household spending to grow over the next five years across all areas of the retail
sector. Food and non-alcoholic drinks spending represents the largest source of household expenditure, at
US$345.2bn in 2014, while alcoholic drinks and tobacco is forecast to account for a further US$37.5bn.
Clothing and footwear spending will account for US$92.4bn in 2014, and is forecast to rise to US$144.9bn
by 2018. Meanwhile, spending on personal, insurance and other products will reach US$196.3bn in 2014, a
sizeable figure compared with the expenditure on furnishing and home (US$50.7bn) in 2014, according to
our projections.
Although food and drink, housing and utilities, transport, and personal care will continue to account for the
lion's share of household spending, areas such as health, communications, recreation and culture, education
and restaurants and hotel expenditure will grow steadily as India's population becomes more affluent and
discerning. A very sizeable, and growing, 21-39 age bracket will benefit retailers selling high-end goods
across all sectors, but particularly consumer electronics, clothing and footwear and home furnishings seen
as marks of personal affluence.
Food, Drink And Tobacco
Food, drink and tobacco represents the largest area of expenditure in Indian household spending. According
to our forecasts, food and non-alcoholic drinks spending will account for US$345.2bn during 2014, while
alcoholic drinks and tobacco will account for an additional US$37.5bn. Within food and non-alcoholic
drinks, the largest portion of the household spend goes on food, however, non-alcoholic drinks
expenditure amounts to US$66.4bn in 2014, and is forecast to reach US$98.2bn by 2018. Food spending
will see a more limited rate of growth than both non-alcoholic drinks and alcohol and tobacco, largely
because growth will come from affluence-instigated purchasing of more expensive items. We are
forecasting average growth for non-alcoholic drinks of around 10.7% annually between 2014 and 2018, and
growth of 11.8% year-on-year (y-o-y) for alcohol and tobacco over the same timeframe.
Table: Food, Drink And Tobacco Spending, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Food and non-alcoholic drinks spending,
INRbn 15,375 16,925 18,342 20,020 21,833 23,835 26,046 28,374
Food and non-alcoholic drinks spending, US
$bn 329.4 316.8 310.9 345.2 385.5 418.7 455.3 493.5
$ % chg 10.2 -3.8 -1.9 11.0 11.7 8.6 8.7 8.4
Food, Drink And Tobacco Spending, 2011-2018 - Continued

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
$ per household 1,335 1,260 1,217 1,329 1,461 1,562 1,677 1,794
$ per capita 270 256 248 272 301 323 347 372
Food spending, US$bn 268.3 257.2 251.8 278.8 310.6 336.7 365.3 395.3
Food spending, US$ % chg 9.8 -4.1 -2.1 10.7 11.4 8.4 8.5 8.2
Non-alcoholic drinks spending, US$bn 61.1 59.6 59.1 66.4 74.9 82.0 89.9 98.2
Non-alcoholic drinks spending, US$ % chg 11.9 -2.4 -0.8 12.2 12.8 9.6 9.6 9.2
Alcoholic drinks and tobacco spending, US
$bn 33.1 32.9 33.0 37.5 42.7 47.3 52.4 57.6
Alcoholic drinks and tobacco spending, US$
% chg 15.2 -0.8 0.4 13.6 14.0 10.7 10.7 10.1
Alcoholic drinks spending, US$bn 12.5 12.4 12.5 14.2 16.1 17.9 19.8 21.7
Alcoholic drinks spending, US$ % chg 15.2 -0.9 0.3 13.5 13.9 10.7 10.6 10.1
Tobacco spending, US$bn 20.6 20.4 20.5 23.3 26.6 29.4 32.6 35.9
Tobacco spending, US$ % chg 15.2 -0.7 0.4 13.7 14.1 10.8 10.7 10.1
Clothing And Footwear
Clothing and footwear accounts for the fifth-highest proportion of household spending, although it is some
way short of the 'big-spending' categories of food and drink, personal care, transport and housing & utilities.
However, our forecasts show that the amount of household spending on clothing will increase from US
$92.4bn in 2014 to US$144.9bn by 2018, an average annual increase of 12.4%. The sheer size of the 20-39
years age bracket and the increasing number of homes moving into the middle-income bracket of US
$10,000+ mean that spending on fashion and other luxury items will increase.
Clothing constitutes the largest part of clothing and footwear spending, at US$77.4bn, and is forecast to
increase at an annual average rate of 12.4% to reach US$121.4bn by 2018. Footwear spending, while much
smaller, is forecast to grow slightly more rapidly, by 12.5% y-o-y, to reach US$23.5bn by the end of our
forecast period.
Table: Clothing and Footwear Spending, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Clothing and footwear spending, INRbn 3,725 4,270 4,766 5,357 5,999 6,710 7,499 8,331
Clothing and footwear spending, US$bn 79.8 79.9 80.8 92.4 105.9 117.9 131.1 144.9
Clothing and footwear spending, US$ % y-
o-y 16.8 0.1 1.1 14.4 14.7 11.3 11.2 10.5
Clothing and footwear spending, US$ per
household 323.5 318.0 316.1 355.7 401.4 439.9 482.8 526.9
Clothing and footwear spending, US$ per
capita 65.4 64.6 64.5 72.9 82.6 90.9 100.0 109.3
Clothing spending, US$bn 66.9 67.0 67.7 77.4 88.7 98.7 109.8 121.4
Clothing spending, US$ % y-o-y 16.8 0.1 1.0 14.3 14.6 11.3 11.2 10.5
Footwear including repair spending, US$bn 12.9 12.9 13.1 15.0 17.2 19.1 21.3 23.5
Footwear including repair spending, US$ %
y-o-y 17.3 0.3 1.2 14.5 14.8 11.4 11.3 10.6
Household Goods
Household goods spending accounts for a modest (for India) US$65.0bn of overall household spending in
2014. The sector is set to see continued spending as the number of households in the middle US$10,000+
income bracket reaches around 70mn by 2018, encouraging expenditure on luxury, non-essential items.
Nevertheless, the subsector is expected to underperform other segments, such as clothing and footwear, with
spending on household goods forecast to decline slightly, to US$63.1bn, by 2018.
Table: Household Goods Spending, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Household goods spending, INRbn 1,796.2 2,044.7 2,271.2 2,541.2 2,834.0 3,158.2 3,517.7 3,896.7
Household goods spending, US$ per
household 173.5 221.5 264.4 250.4 234.1 232.0 230.5 229.3
Household goods spending, US$ per
capita 35.1 45.0 54.0 51.3 48.2 47.9 47.7 47.6
Household goods spending, US$bn 42.8 55.7 67.6 65.0 61.8 62.2 62.6 63.1
Household goods spending, US$ %
y-o-y 3.6 30.1 21.4 -3.8 -5.0 0.6 0.7 0.7
Furniture and furnishings spending,
US$bn 3.9 5.1 6.2 5.9 5.7 5.7 5.8 5.8
Household Goods Spending, 2011-2018 - Continued

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Furniture and furnishings spending,
US$ % y-o-y 4.0 30.5 21.6 -3.6 -4.8 0.8 0.8 0.9
Household textiles spending, US$bn 7.6 10.0 12.1 11.7 11.1 11.2 11.3 11.4
Household textiles spending, US$ %
y-o-y 4.0 30.4 21.6 -3.6 -4.8 0.8 0.8 0.8
Household appliances spending, US
$bn 19.0 24.7 30.1 29.0 27.6 27.8 28.0 28.3
Household appliances spending, US
$ % y-o-y 4.0 30.4 21.6 -3.6 -4.8 0.8 0.8 0.8
Glass, tableware and utensils
spending, US$bn 3.7 4.8 5.8 5.6 5.3 5.4 5.4 5.5
Glass, tableware and utensils
spending, US$ % y-o-y 4.0 30.4 21.6 -3.6 -4.8 0.8 0.8 0.8
Home & garden tools/equipment
spending, US$bn 3.0 3.9 4.7 4.5 4.3 4.3 4.4 4.4
Home & garden tools/equipment
spending, US$ % y-o-y 4.1 30.5 21.6 -3.6 -4.8 0.8 0.8 0.9
AV, camera and computer spending,
US$bn 4.7 6.0 7.2 6.9 6.4 6.4 6.4 6.4
AV, camera and computer spending,
US$ % y-o-y 0.9 27.8 19.8 -5.0 -6.1 -0.4 -0.3 -0.1
Toys, sports, gardens and pets
spending, US$bn 1.0 1.2 1.5 1.4 1.3 1.3 1.3 1.3
Toys, sports, gardens and pets
spending, US$ % y-o-y 0.9 27.8 19.8 -5.0 -6.1 -0.4 -0.3 -0.1
Personal Care
'Personal, insurance and other' is one of the largest retail sectors with regard to household spending,
accounting for US$196.3bn of total expenditure during 2014, according to our calculations. Within this,
personal care and effects represents US$79.4bn, and we believe this retail subsector will continue to see
strong growth over the next five years. In light of this, we are forecasting total household spending on
personal care and effects to reach US$125.7bn by 2018, at an average growth rate of 13.0%.
Within personal care and effects, personal care products spending is slightly higher than personal effects
products expenditure, at US$40.3bn in 2014 compared with US$39.1bn. The forecast rate of growth for
each is very similar, at 13.1% y-o-y compared with 13.0%.
Table: Personal Care Spending, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Personal care and effects spending, INRbn 3,974.3 3,980.7 4,023.9 4,602.4 5,278.4 5,875.9 6,534.9 7,224.8
Personal care and effects spending, US$bn 85.1 74.5 68.2 79.4 93.2 103.2 114.2 125.7
Personal care and effects spending, US$ % y-o-y 13.9 -12.5 -8.5 16.3 17.4 10.8 10.7 10.0
Personal care and effects spending, US$ per
household 345.1 296.4 266.9 305.5 353.2 385.2 420.7 456.9
Personal care and effects spending, US$ per
capita 69.7 60.3 54.5 62.6 72.7 79.6 87.1 94.8
Personal care products spending, US$bn 43.2 37.8 34.6 40.3 47.3 52.4 58.0 63.9
Personal care products spending, US$ % y-o-y 13.9 -12.5 -8.5 16.4 17.5 10.8 10.7 10.0
Personal effects products spending, US$bn 42.0 36.7 33.6 39.1 45.9 50.8 56.2 61.8
Personal effects products spending, US$ % y-o-y 13.9 -12.5 -8.5 16.3 17.4 10.7 10.6 10.0
f = BMI forecast. National Statistics, BMI
Household Numbers And Income Forecast
BMI View: India is set to see an average annual increase of 1.5% in the number of households over our
forecast period. The majority of these will be in the middle-income bracket of US$10,000+, with an
impressive 70mn households falling into this category by 2018. The highest income category of US$50,000-
plus will see the slowest growth, although the number of households in this income bracket will still rise
from 19.8mn to 23.6mn by 2018.
This emphasises that retailers that target the middle segment of the market, such as footwear retailer Lotte,
are likely to experience strong growth over the next few years. Although the number of households in the
lowest and highest income brackets will see more than respectable growth, it is the middle-income
households that will see the largest rise in numbers over our forecast period, thus presenting retailers with a
strong opportunity.
Limited Middle Class Expansion Over The Short Term
Household Income ('000), 2010-2017
Households '000 Net Income US$5,000+
2
0
1
0
2
0
1
1
e
2
0
1
2
e
2
0
1
3
e
2
0
1
4
f
2
0
1
5
f
2
0
1
6
f
2
0
1
7
f
0
100,000
200,000
300,000
Sources: National Statistics, World Bank, BMI calculation
Overall incomes are rising, with a corresponding increase in household spending. Our forecasts show that
household and per capita income will continue to rise over the next few years on the back of India's strong
economic trajectory. Net income per household is forecast to be US$9,735 by 2018, a marked improvement
on 2014's projected US$6,725. Equally, net per capita income is forecast to grow strongly between 2014
and 2018, from US$1,363 to US$1,988.
We believe that India's emerging middle class will continue to drive demand for new goods and services,
and that rural retailing presents expansion opportunities for retailers
Table: Household Data, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
House-
holds,
number 246,692,667 251,353,373 255,532,855 259,707,536 263,860,239 267,984,468 271,520,758 275,018,423
House-
holds, % y-
o-y 2.0 1.9 1.7 1.6 1.6 1.6 1.3 1.3
Average
persons per
house-hold 5.0 4.9 4.9 4.9 4.9 4.8 4.8 4.8
Gross
Income, per
house-hold,
INR 304,965 387,744 365,517 402,123 440,168 481,240 526,909 577,001
Gross
Income, per
house-
hold, US$ 6,534 7,258 6,195 6,933 7,771 8,454 9,210 10,036
Gross
Income, per
capita, INR 61,361 78,544 73,930 81,529 89,426 97,951 107,431 117,828
Gross
Income, per
capita, US$ 1,315 1,470 1,253 1,406 1,579 1,721 1,878 2,049
Net Income,
per house-
hold, INR 295,816 376,112 354,552 390,060 426,963 466,803 511,102 559,691
Net Income,
per house-
hold, US$ 6,338 7,040 6,009 6,725 7,538 8,200 8,934 9,735
Net Income,
per capita,
INR 59,521 76,188 71,712 79,083 86,743 95,013 104,208 114,294
Net Income,
per
capita,US$ 1,275 1,426 1,215 1,363 1,531 1,669 1,822 1,988
Tax and
social
contribution,
% of gross
income 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0
Household Data, 2011-2018 - Continued

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Tax and
social
contribution,
per capita,
INR 1,841 2,356 2,218 2,446 2,683 2,939 3,223 3,535
Tax and
social
contribution,
per
capita, US$ 39 44 38 42 47 52 56 61
House-holds
'000 earning
US$5,000+ 110,518 132,715 103,235 127,257 153,039 172,582 192,237 209,564
House-holds
'000 earning
US$10,000+ 24,524 25,135 25,313 25,910 33,774 44,485 54,847 70,405
House-holds
'000 earning
US$50,000+ 18,255 19,428 18,549 19,799 20,985 21,912 22,744 23,555
House-holds
earningUS
$5,000+, %
total house-
holds 44.8 52.8 40.4 49.0 58.0 64.4 70.8 76.2
House-holds
earningUS
$10,000+,
% total
house-holds 9.9 10.0 9.9 10.0 12.8 16.6 20.2 25.6
House-holds
earningUS
$50,000+,
% total
house-holds 7.4 7.7 7.3 7.6 8.0 8.2 8.4 8.6
Sources: UN, BMI, World Bank, BMI calculation
The key opportunity for retailers in the future is the growth of the middle-income bracket (US$10,000+)
where households have enough money to spend on luxury products and non-essential items. We are
forecasting the number of households falling into this bracket to grow by almost 172% between 2014 and
2018, from around 26mn to more than 70mn. This represents an increase from around 10% of total
households to almost 26% - a sizeable target market for retailers.
The next phase of growth in the Indian retail market is expected to come from rural areas, with per capita
income growing on account of rising commodity prices and improved productivity.
Demographic Forecast
BMI View: India's population is forecast to show steady growth over the next five years, rising from a
forecast 1.27bn in 2014 to 1.33bn by 2018. This represents a strong boost for household spending on the
retail sector, particularly when taken in conjunction with rising consumer spending levels and economic
growth forecasts.
Taking a closer look at India's population subsectors, we note that the strongest growth and largest areas of
the population are going to be in the 20-39-year age bracket, the main driver for retail expenditure. Our
current forecasts put the 21+ population at around 761mn, and we are forecasting it to increase to 819mn by
2018. Although this represents a prime target market for retailers, with the chance to build up long-term
brand loyalty among younger customers, we do warn that over the long term this age bracket will see a
moderate shrinkage as our current forecasts for new babies under one year old show consistent decline over
the next five years, as does the subsector relating to those under four years of age. This means that in 15-20
years' time, the key target market will be somewhat smaller than it is today.
Limited Urbanisation Inhibits Retail Sector Despite Population Growth
Total Population, Urban Population ('000)
Total population, '000 Urban population, '000
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
e
2
0
1
2
e
2
0
1
3
e
2
0
1
4
f
2
0
1
5
f
2
0
1
6
f
2
0
1
7
f
2
0
1
8
f
0
500,000
1,000,000
1,500,000
Sources: World Bank/UN/BMI
At the same time, another factor revealed by our demographic forecasts is the vast percentage of the
population focused in rural areas - currently around 68%, according to our calculations. By 2018, the rural
population is still likely to constitute 66% of the total, and growth in retail is expected to come from rural
areas. Many domestic players are shifting gear to tier 2 and 3 cities, where increased salaries and growing
aspiration levels are allowing retailers such as Spencer's, Spar, Reliance Retail, Aditya Birla Retail,
Shopper's Stop and Trent's Westside to set up shop.
Table: Total Population, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Total population, '000 1,221,156 1,236,687 1,252,140 1,267,402 1,282,390 1,297,075 1,311,476 1,325,620
Total population, % y-o-y 1.3 1.3 1.2 1.2 1.2 1.1 1.1 1.1
Total population, male '000 631,654 639,566 647,437 655,206 662,830 670,290 677,599 684,769
Total population, female '000 589,502 597,121 604,703 612,196 619,561 626,784 633,876 640,851
World Bank, UN, BMI
Table: Population: Babies, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Babies 0-12 months, '000 23,929 24,278 24,707 25,047 25,180 25,039 24,698 24,251
Babies 0-12 months, % y-o-y 0.6 1.5 1.8 1.4 0.5 -0.6 -1.4 -1.8
Babies 0-12 months, % population 2.0 2.0 2.0 2.0 2.0 1.9 1.9 1.8
Babies 0-12 months, male '000 12,588 12,768 12,990 13,166 13,233 13,157 12,976 12,740
Babies 0-12 months, female '000 11,341 11,509 11,716 11,882 11,947 11,882 11,722 11,511
World Bank, UN, BMI
Table: Population: Young Children, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Young children 0-4 yrs, '000 121,206 121,433 121,815 122,128 122,215 122,023 121,612 121,061
Young children 0-4 yrs, % y-o-y -0.1 0.2 0.3 0.3 0.1 -0.2 -0.3 -0.5
Young children 0-4 yrs, % population 9.9 9.8 9.7 9.6 9.5 9.4 9.3 9.1
Young children 0-4 yrs, male '000 63,801 63,918 64,112 64,269 64,305 64,194 63,968 63,667
Young children 0-4 yrs, female '000 57,405 57,515 57,703 57,860 57,910 57,829 57,644 57,394
World Bank, UN, BMI
Table: Population: Children, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Children 5-9 yrs, '000 122,368 121,683 120,861 120,159 119,757 119,728 120,001 120,428
Children 5-9 yrs, % y-o-y -0.3 -0.6 -0.7 -0.6 -0.3 0.0 0.2 0.4
Children 5-9 yrs, % population 10.0 9.8 9.7 9.5 9.3 9.2 9.2 9.1
Children 5-9 yrs, male '000 64,410 64,065 63,646 63,287 63,080 63,065 63,206 63,423
Children 5-9 yrs, female '000 57,958 57,617 57,215 56,873 56,677 56,663 56,796 57,005
World Bank, UN, BMI
Table: Population: Young Teens and Older Children, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Young teens and older children 10-14
yrs, '000 120,274 120,880 121,445 121,801 121,842 121,501 120,842 120,049
yrs, % y-o-y 0.4 0.5 0.5 0.3 0.0 -0.3 -0.5 -0.7
yrs, % population 9.8 9.8 9.7 9.6 9.5 9.4 9.2 9.1
yrs, male '000 63,196 63,539 63,858 64,066 64,105 63,942 63,611 63,207
yrs, female '000 57,078 57,341 57,587 57,736 57,737 57,559 57,231 56,842
World Bank, UN, BMI
Table: Population: Young People, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Young people 0-14 yrs,'000 363,848 363,996 364,121 364,089 363,813 363,252 362,455 361,538
Young people 0-14 yrs,% y-o-y 0.0 0.0 0.0 0.0 -0.1 -0.2 -0.2 -0.3
Young people 0-14 yrs,% population 29.8 29.4 29.1 28.7 28.4 28.0 27.6 27.3
Young people 0-14 yrs, male '000 191,407 191,522 191,617 191,621 191,490 191,202 190,784 190,297
Young people 0-14 yrs, female '000 172,441 172,474 172,504 172,468 172,324 172,050 171,671 171,241
World Bank, UN, BMI
Table: Population: Older Teenagers, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Older teenagers 15-19 yrs, '000 117,232 117,615 117,998 118,414 118,878 119,432 120,058 120,638
Older teenagers 15-19 yrs, % y-o-y 0.4 0.3 0.3 0.4 0.4 0.5 0.5 0.5
Older teenagers 15-19 yrs, % population 9.6 9.5 9.4 9.3 9.3 9.2 9.2 9.1
Older teenagers 15-19 yrs, male '000 61,462 61,707 61,938 62,181 62,448 62,763 63,114 63,439
Older teenagers 15-19 yrs, female '000 55,769 55,907 56,059 56,233 56,430 56,669 56,944 57,199
World Bank, UN, BMI
Table: Population: 21yrs +, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Population 21+ yrs, '000 717,258 732,048 746,651 761,355 776,285 790,318 804,773 819,432
Population 21+ yrs, % y-o-y 2.2 2.1 2.0 2.0 2.0 1.8 1.8 1.8
Population 21+ yrs, % population 58.7 59.2 59.6 60.1 60.5 60.9 61.4 61.8
Population 21+ yrs, male '000 366,872 374,292 381,638 389,057 396,603 403,696 411,007 418,422
Population 21+ yrs, female '000 350,386 357,757 365,012 372,298 379,682 386,621 393,766 401,010
World Bank, UN, BMI
Table: Population: Young Adults, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Young adults 20-39 yrs,'000 396,721 402,755 408,626 414,247 419,555 424,505 429,106 433,411
Young adults 20-39 yrs,% y-o-y 1.6 1.5 1.5 1.4 1.3 1.2 1.1 1.0
Young adults 20-39 yrs,% population 32.5 32.6 32.6 32.7 32.7 32.7 32.7 32.7
Young adults 20-39 yrs, male '000 205,978 209,152 212,270 215,276 218,129 220,806 223,311 225,670
Young adults 20-39 yrs, female '000 190,743 193,602 196,356 198,972 201,426 203,699 205,795 207,741
World Bank, UN, BMI
Table: Population: Middle Aged, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Middle aged 40-64 yrs,'000 246,748 252,086 257,259 262,463 267,843 273,439 279,214 285,140
Middle aged 40-64 yrs,% y-o-y 2.3 2.2 2.1 2.0 2.0 2.1 2.1 2.1
Middle aged 40-64 yrs,% population 20.2 20.4 20.5 20.7 20.9 21.1 21.3 21.5
Middle aged 40-64 yrs, male '000 143,795 147,504 151,208 154,871 158,471 161,993 165,451 168,877
Middle aged 40-64 yrs, female '000 36,392 36,993 37,591 38,244 38,991 39,849 40,798 41,800
World Bank, UN, BMI
Table: Population: Urban, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f
Urban population, '000 382,161 391,535 400,998 410,511 420,047 430,237 440,454 450,703
Urban population, % population 31.3 31.7 32.0 32.4 32.8 33.2 33.6 34.0
Rural population, '000 838,995 845,152 851,142 856,890 862,343 866,838 871,022 874,917
Rural population, % population 68.7 68.3 68.0 67.6 67.2 66.8 66.4 66.0
World Bank, UN, BMI
Macroeconomic Forecasts
BMI View: Starting with the sell-off in the rupee, economic headwinds have accumulated quickly in India,
forcing us to downgrade our real GDP growth expectations. The rupee's performance and the harsh
response it has forced the central bank to enact suggest to us that private domestic demand will be much
weaker than previously anticipated. As such, we now see full-year real GDP growth remaining flat at 5.0%
in FY2013/14 (April-March).
Starting with the massive sell-off in the rupee which began in May, economic headwinds in India have
accumulated quickly and in a big way, forcing us to downgrade our growth expectations on Asia's third
largest economy. We now see full-year real GDP growth remaining flat this fiscal year (FY2013/14 [April-
March]) at 5.0% (down from 5.5% previously) and we are now expecting a less-than-stellar 5.6% growth
bounce in FY2014/15 (down from 6.0% previously). To be sure, this downgrade is not taking place in
isolation as we have made similar revisions to the outlook for other emerging markets recently. For
instance, our 2013 and 2014 growth projections for Brazil were recently lowered to just 2.0% and 2.5%,
from 2.6% and 2.5%, respectively (see 'Significant Headwinds To Weigh On Growth In 2013 And 2014',
August 14).
The Trials And Tribulations Of The Rupee
The primary reason we have decided to downgrade our near-term growth forecasts on India is the sell-off in
the rupee and the harsh response it has forced the country's central bank to enact. As one of the worst
performing major currencies in the world, the rupee has fallen by about 15% against the dollar to new lows
since the start of May, hurting confidence and, more importantly, impinging significantly on purchasing
power. While we are still constructive towards the unit over the medium term (see 'INR: A Constructive
Case For The Rupee', June 27), the macroeconomic impact of the currency losses suffered so far cannot be
ignored
We wrote recently on the differing channels in which the rupee's demise harms the country's growth
prospects (see 'Rupee Collapse Reinforces Growth Concerns', July 4), with its likely impact on the
trajectory of monetary policy and interest rates in general a pertinent concern. Indeed, back then, we
highlighted the risk that movements in the currency markets could ultimately force the Reserve Bank of
India (RBI) to hike its key policy rates. We note that the RBI has enacted a handful of tightening measures
to support the beleaguered rupee since late May, culminating in the surprise 25 basis point repo rate hike
introduced in its September meeting.
A Bad Signal
India - 2s-10s Spread, bps
Source: BMI
Undeniably, the sternest measures the central bank has enacted so far - and most impactful from the
perspective of the broader economy - were the liquidity tightening steps introduced on July 15. These
include the hike in the marginal standing facility rate by 200 basis points (bps) to 10.25%, the restriction of
overall access by way of the liquidity adjustment facility INR750bn, and the announcement that open
market sales of government securities would be conducted on July 18. The surprise announcement of these
measures led to the first spike in sovereign debt yields across all maturities, eventually resulting in the
extreme inversion of India's yield curve, which sends a bleak signal on growth. Even though the RBI
decided to pull back some of these earlier measures in its most latest monetary policy review, the negative
impact it has had on India's yield curve remains.
Domestic Demand Downgraded
With these headwinds in mind, we have decided to downgrade our real growth projections for private
domestic demand (private consumption plus gross fixed capital formation). For FY2013/14, our private
consumption growth forecast stands at 3.5% (from 4.5% previously), while our projection for fixed-capital
formation has been taken down to a similar rate of 3.5% (from 6.0%). While positive for growth from a
statistical point of view, it is worth noting that we have also downgraded our import growth projection to
3.0% (from 4.0% previously).
Domestic Struggles
India - Industrial Production, % chg y-o-y
Source: BMI, Ministry of Statistics and Programme Implementation (India)
From a bottom-up perspective, we highlight that our industry analysts have either made or are in the process
of downgrading their respective market outlooks on India. Indeed, with auto sales disappointing in the first
four months of FY2013/14, and as the rupee continues to depress consumer and corporate sentiment, our
autos desk has turned bearish towards the sector (see 'Turning Bearish On Autos', August 14). On the
infrastructure side, the team has taken a more bearish outlook on India due to the persistence of dampening
factors such as the non-conducive monetary policy, policy inertia, and lacklustre infrastructure activity (see
'Construction Outlook Worsening Due To Several Headwinds', August 18).
Q213 Growth Slowest Since 2008
Justifying the decision to downgrade our growth expectations for the current fiscal year, the latest national
accounts showed Indian real GDP growth having weakened to its slowest pace since Q408. Indeed, headline
growth ticked down to 4.4% y-o-y in Q213, down from 4.8% in the previous quarter and marking the lowest
rate of expansion since the 3.5% clip registered in the immediate aftermath of the 2008 global financial
crisis. Crucially, the latest numbers showed private domestic demand, which accounts for close to 90% of
GDP, softening to its slowest rate of growth since Q109 (-0.7% y-o-y), coming in at just 0.6% in Q213.
Real private consumption growth softened to a decade-plus low of 1.6% y-o-y in Q213, while gross fixed
capital formation contracted by 1.2% after having expanded by 3.4% in Q113.
Expenditure Breakdown
Private Consumption
We project real private consumption growth to edge lower for the third straight year to 3.5% from 4.0% in
FY2012/13, contributing just 2.2 percentage points (pp) to headline growth. Private consumption makes up
the lion share of the Indian economy at roughly 60% of GDP.
Public Consumption
Real public consumption growth is forecasted to surge to 8.0% this fiscal year from 3.9% in FY2012/13,
with its contribution to headline growth doubling from 0.5pp to 1.0pp.
Gross Fixed Capital Formation
Fixed capital formation growth is projected to more than double, albeit from a very low base of 1.7% in
FY2012/13, to 3.5% this fiscal year. The component's statistical contribution to the country's headline
growth figure is thus expected to come in at 1.2pp.
Net Exports
With export growth of 7.5% and import growth of 3.0% this fiscal year, net exports overall are projected to
provide a 0.8pp boost to headline real GDP growth, marking a temporary change from the drag it has had on
the economy in recent years.
Table: India - Economic Activity

2008 2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f
Nominal GDP,
INRbn 1,6
53,036 61,089 72,670 83,535 94,610 105,818 118,137 131,111 145,253 161,076
Nominal GDP,
US$bn 2,6
1,151.40 1,293.30 1,596.20 1,834.90 2,078.20 1,889.60 2,187.70 2,377.90 2,621.30 2,892.40
Real GDP
growth, %
change y-o-y
3,6
6.7 8.6 9.3 6.2 5.0 5.0 5.6 6.2 6.5 6.6
GDP per capita,
US$ 6
980 1,087 1,324 1,503 1,680 1,509 1,726 1,854 2,021 2,205
Population, mn
7
1,174.70 1,190.10 1,205.60 1,221.20 1,236.70 1,252.10 1,267.40 1,282.40 1,297.10 1,311.50
Industrial
production
index, % y-o-y,
ave 4,6
2.9 5.3 8.3 3.1 1.2 3.5 5 7.2 8 7.5
Unemployment,
% of labour
force, eop 5,8
6.8 10.7 10.8 8 10.5 10.5 9.5 8 8 8
Notes:
e
BMI estimates.
f
BMI forecasts.
1
GDP @ factor cost, fiscal years ending March 31 (1990=1990/91);
2
2011=FY2011/12, GDP @ Factor Cost, f=BMI forecast;
3
2011=FY2011/12, factor cost, f=BMI forecast;
4
New series used
from 2005/06 onwards;
5
No official time series data on Indian unemployment; CIA Factbook offers best alternative proxy.
National Sample Survey Organization (NSSO) also calculates unemployment rate, but surveys conducted every 5 years.
Labour bureau published first employment su. Sources:
6
Central Statistics Organisation/BMI;
7
World Bank/UN/BMI;
8
CIA World Factbook.
Industry Risk Reward Ratings
Asia Risk/Reward Ratings
The attraction of the Asia Pacific retail market to potential investors is based on the region's population size
and growth prospects, the relative immaturity of many of the markets in the region and the potential for the
organised retail sector to enlarge its share of overall retail sales. Offsetting these factors are generally high
levels of country risk in key markets.
Table: Asia Retail Risk Reward Ratings
Rewards Risks

Limits of
Potential
Returns
Retail
Market
Limits
Country
Structure
Limits
Risks to
Returns
Retail
Industry
Risks
Country
Risk
Retail
Rating Rank
Hong Kong 52.78 48.61 56.94 62.47 50.00 70.79 55.69 1
China 53.47 31.94 75.00 60.52 60.00 60.86 55.59 2
Singapore 51.39 45.83 56.94 63.15 50.00 71.92 54.92 3
Indonesia 52.78 30.56 75.00 51.24 50.00 52.06 52.32 4
Philippines 51.39 30.56 72.22 52.31 50.00 53.84 51.66 5
Malaysia 46.53 31.94 61.11 60.25 50.00 67.08 50.64 6
India 48.61 30.56 66.67 44.97 50.00 41.62 47.52 7
Source: BMI
Industry Risk/Reward Ratings
BMI View: India has scored an overall retail Risk/Reward Rating of 47.52, putting it in seventh (and last)
place overall in Asia. Despite its huge population and strong forecast household spending growth, it has
very low household spending per capita, a small urban population, poor physical and labour infrastructure,
and a challenging regulatory environment, despite some recent relaxation in the rules governing foreign
investment.
Rewards
India scores 66.67 overall for the potential rewards offered by the retail sector and the country as a whole,
fourth for the region. The territory garners a modest score for market entry potential - a reflection of strict
rules governing foreign direct investment, despite some relaxation in recent times. It also has a low score for
current household spending, but is boosted by the growth potential of consumer expenditure - a growing
number of households are falling into the middle-income US$10,000+ earnings bracket, with a great deal of
money to spend on non-essential, aspirational purchases, particularly in the household appliances, clothing,
personal care and consumer electronics sectors.
The country has a regional reward rating of 48.61, sixth for the region, hampered by its small urban
population. India also scores modestly on the market rewards rankings, with an overall score of 30.56
putting it in joint fifth place, held back by low household spending per capita.
Risks
India has an overall score of 41.62 for risks to returns based on market and country risks faced by potential
investors in the retail sector. This puts it in last place regionally. This low score is due to its poor physical
and labour infrastructure, and a challenging regulatory environment that persists, despite a modicum of
relaxation in the rules governing foreign investment.
Market Overview
BMI View: Global retail groups are attracted to India because of its emerging middle class and the
opportunity to capitalise on the growing number of households falling into the middle-income bracket of US
$10,000+. Rural areas offer increasing opportunities, with increased salaries and growing aspiration levels
among countryside dwellers allowing many domestic players to shift gear to tier 2 and 3 cities, such as
Pune, Kochi, Baroda, Surat, Chandigarh and Kanpur.
We believe household spending on the retail sector in India will be in the region of US$1,104bn in
2014. Retail is the second-largest employment sector after agriculture, and employs 44mn people. The
emergence of organised retail formats is transforming the face of retailing in India, as domestic and foreign
players challenge the dominance of the country's traditional 'mom and pop' stores by opening chain and
speciality stores across the country to satisfy increasing consumer demand.
The emergence of a middle class with more disposable income to spend on non-food, non-essential items,
and growing brand awareness, are two of the key factors in India's ongoing attractiveness to global retail
groups. As noted in the forecasts, an impressive 70mn households will fall into the middle- income bracket
of US$10,000+ by 2018 (almost 26% of the total), offering significant opportunities to retailers offering
goods such as clothing and footwear, and catering to the growing demand for branded products.
Rising Incomes And Rising Population
Total Population ('000) Total Household Spending (US$bn)
Total population, '000 (LHS)
Total household spending, US$bn (RHS)
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
e
2
0
1
2
e
2
0
1
3
e
2
0
1
4
f
2
0
1
5
f
2
0
1
6
f
2
0
1
7
f
2
0
1
8
f
0
500,000
1,000,000
1,500,000
0
500
1,000
1,500
2,000
Sources: World Bank/UN/BMI/National Statistics
Following India's belated and widely publicised decision to open up its retail sector to foreign multi-brand
retailers in September 2012, it has quickly become apparent that the initial plan was flawed and complex,
due to difficulties created for would-be entrants to make a business case for a full-scale entry beyond
wholesale retailing. Over the past few months, India has made some minor concessions that it hopes will
make its food retail sector more attractive. Recent amendments include stipulating that half of the first US
$100mn invested in the first three years has to be directed to back-end infrastructure. Restrictions on what
type of local suppliers can be used have also been relaxed, allowing retailers to maintain suppliers that grow
past US$2mn in assets, which was not permitted in the original stipulations. These small suppliers must
account for about 30% of overall supplies. By comparison, single-brand retailers, such as IKEA, do not
face the vast majority of these hurdles, meaning there is still a major, and perhaps unique, distinction made
by India between single- and multi-brand retailers.
Somewhat surprisingly, the UK's Tesco is set to be the first retail superpower to take on the challenge. In
January 2014, it received the go-ahead to invest US$110mn in a joint supermarket venture with the Tata
Group conglomerate. Tata has a strong track record working with foreign multinationals in joint ventures,
with recent examples including Starbuck's. Walmart, which parted company with India's Bharti
Enterprises in October 2013, has subsequently registered a new company in India as it looks ready to enter
the multi-brand retail market with a new partner.
India's Foreign Investment Promotion Board (FIPB) has also approved a proposal by the British telecoms
group Vodafone to take full ownership of its Indian business. However, this deal will need to go through
several stages before it is complete. Hennes & Mauritz (H&M) has also been given final approval by
India's government to open stores in the country. The Swedish retailer announced in December 2013 that it
planned to invest INR7.2bn (US$115.5mn) and open 50 stores across India. Marks & Spencer (M&S),
meanwhile, plans to double its store count to 80 - making India its biggest overseas market.
Joint ventures and franchises remain the main route for global retail operators. Quest Retail, part of the
Planet Retail group, is the master franchisee of The Body Shop in India; while significant India-based
retailers include Future Group, K Raheja Corp, RPG Enterprises, ABRL and Reliance Retail Limited
(RRL).
India's household spending on the retail sector has seen consistent growth over the past few years, and
represents a significant portion of the country's overall GDP, at 59.1%, amounting to US$1,204bn in 2014.
Household spending on the retail sector should still constitute 58.6% of GDP by 2018, and be worth US
$1,820bn.
Growing consumer spending power and a pattern of strong economic growth likely to reassert itself over the
medium term are key factors behind the forecast rise in India's household spending on the retail sector. A
strong tourism industry will also provide an important boost to consumer spending, with the increasing
strength of the domestic economy and the rises in inbound and outbound travel expected to result in a strong
increase in receipts for tourism-related expenditure in India. Receipts for travel items increased by 4.58%
year-on-year in 2012. Over the forecast period, we expect receipts for travel items to increase substantially
to reach US$30.4bn in 2018, up from US$18.0bn in 2013.
India's population is forecast to show only modest growth over the next five years, rising from a forecast
1.27bn in 2014 to 1.33bn by 2018. However, the strongest growth and largest areas of the population will be
in the key 20-39 year age bracket, the main driver for retail expenditure. Our current forecasts put the 21+
population at around 761mn, and we are forecasting it to increase to 819mn by 2018. This represents a
prime target market for retailers, with the chance to build up long-term brand loyalty among younger
customers. Although our current forecasts for new babies under one year old show consistent decline over
the next five years, as do all under-15 age categories, the 15-19 age bracket is expected to grow slightly
between 2014 and 2018, by an average 0.4% y-o-y; while the 21+ years category is forecast to increase by
1.9% y-o-y over the same period. This gives retailers a sizeable key target market over the next 20 years.
Retail Subsectors
India's retail market may still be dominated by local kirana, paan and beedi (corner) shops, but this is
changing fast as multinationals begin to seek opportunities to enter India and as local organised players
accelerate their own expansion and business activity efforts in preparation for greater competition.
Delhi, Bangalore and Mumbai are among the major cities that attract international retail groups, while tier 2
and 3 cities are also attracting retailers such as Carrefour and Metro as real estate costs in major metro areas
skyrocket. More than 50 districts in India have at least one town with a population of more than 500,000
people; together, these towns have twice the market potential of the four metros (Mumbai, Delhi, Chennai
and Kolkata) combined.
MGR
India's mass grocery retail (MGR) sector is dominated by small-scale traditional retail outlets: BMI
estimates that this fragmented offering still accounts for around 91% of the country's grocery retail sales.
However, the country's economic development has allowed for the further development of MGR, as
increasingly wealthy consumers in major towns and cities turn to modern formats in search of the
convenience and quality they now desire and can increasingly afford.
The modern retail sector is dominated by a handful of players, with the largest being Aditya Birla
Retail (which has recently taken over Pantaloon), Subhiksha, RRL, Margin Free Market and Trinethra
Super Retail. The UK's Tesco is the latest foreign entrant into the market, which already includes
Germany's Metro and Dutch company Spar.
Department Stores
Future Group, which operates some of India's most prominent retail chains, operates the Central department
store chain. It is present in 12 locations in key urban centres, and stocks more than 500 international and
Indian brands across a number of merchandise categories. Lifestyle, Shoppers Stop and FG Central are
also active in the sector, offering a wide range of clothing, footwear, beauty & fashion accessories and
homeware to appeal to India's growing middle class.
Fashion
The department store operators take a large slice of the fashion market, but there are many other players
targeting India's large, young and increasingly brand- and fashion-conscious population.
Future Group operates the Central department store outlets; and has recently sold its Pantaloon fashion
chain, with 46 stores across the country, to the Aditya Birla Group. Bata, meanwhile, has more than 1,250
shoe stores located in over 500 cities. In the footwear segment, New Delhi-based Relaxo Footwear is also
expanding.
Marks & Spencer Reliance India (MSRI) is a joint venture between British retailer M&S and RRL,
opening stores of 15,000-25,000ft
2
in size, even in tier 2 towns, such as Pune. Fellow British mother and
baby chain Mothercare is also present in India via the franchise route; while Italian clothing retailer
Benetton expects its business from India to contribute a significant chunk of its overall revenues in the next
10 years. H&M is the latest fashion entrant, having announced in December 2013 that it planned to invest
INR7.2bn (US$115.5mn) and open 50 stores across the country.
Tourism
A rapidly expanding domestic economy is providing a substantial boost to outbound and domestic travel,
leading to increases across all key market indicators including air and rail travel, as well as tourism-related
expenditure.
Tourism Boosts Retail Sector
Total tourism Receipts (US$bn) Total Tourist Arrivals ('000)
International tourism, receipts~ US$bn (LHS)
Total arrivals, '000 (RHS)
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
e
2
0
1
4
f
2
0
1
5
f
2
0
1
6
f
2
0
1
7
f
2
0
1
8
f
0
10
20
30
-5000
0
5,000
10,000
Sources: World Bank/BMI forecast, Ministry of Tourism, Government of India, Bureau of Immigration India/BMI Forecast/BMI
calculation
BMI is forecasting steady growth in inbound tourism of 5% per year between 2013 and 2016, reaching 6%
in 2017 and 4.86% in 2018. This is an increase on previously forecast growth rates as a result of the
improved international economic outlook. Thanks to this growth, we expect total inbound arrivals to reach
over 8.4mn by 2017, a solid increase on the 2013 estimated arrivals figure of just over 6.9mn, reflecting the
strength of the Indian tourism market. Outbound travel from India is expected to increase steadily over the
forecast period. BMI predicts that India will see an annual average increase of between 9% and 14%
between 2013 and 2017, leading the total annual number of outbound travellers to increase from 13.8mn in
2013 to over 22.5mn at the end of the forecast period, reflecting the massive potential offered by travellers
from within India.
The increasing strength of the domestic economy and the rises in inbound and outbound travel are expected
to result in a strong increase in receipts for tourism-related expenditure in India. Receipts for travel items
increased by 4.58% in 2012 compared with 2011. Over the forecast period we expect receipts for travel
items to increase substantially to reach US$30.4bn in 2018, from US$18.0bn in 2013.
Competitive Landscape
BMI View: India's large, young and brand-conscious population is an attraction for global retail groups
looking to enter the country or to increase their foothold. An emerging middle class with more disposable
income, and a relaxation of foreign direct investment regulations, are also 'plus' factors for those retailers
with India in their sights.
Department Store Groups
Future Group, Lifestyle International, Shoppers Stop and FG Central are among India's department
store chains, offering a wide range of clothing, footwear, beauty & fashion accessories and homeware to
appeal to India's growing middle class.
Future Group
Domestic retailer Future Group operates the Central department store chain. It is present in 12 locations in
key urban centres, and stocks more than 500 international and Indian brands across a number of
merchandise categories. The group, a multiple winner of the 'Most Admired National Retail Group in East
India' at IMAGES East India Retail Awards, has also launched India's first financial retail superstores
offering multi-range financial products.
Lifestyle International
Lifestyle International, part of the Dubai-based Landmark Group, started its operations in India with the
launch of the first Lifestyle store in Chennai in 1999 and is now present across major metros in India. The
stores concentrate on five merchandise categories: clothing, footwear, children's wear and toys, furniture
and home furnishings, and beauty and fashion accessories.
MGR
The MGR sector in India is dominated by a handful of players, with the largest being Pantaloon Retail,
Subhiksha, Reliance Retail (RRL), Big Bazaar, Margin Free Market and Trinethra Super Retail. The
UK's Tesco (which has just received the go-ahead to invest US$110mn in a joint supermarket venture with
the Tata Group) is the latest foreign entrant into the market, which already includes Germany's Metro and
Dutch company Spar. US-based Walmart, which parted company with India's Bharti Enterprises in
October 2013, has registered a new company in India as it looks set to enter the multi-brand retail market
with a new partner.
Pantaloon Retail
Pantaloon Retail, owned by the Aditya Birla Group following its sale by Future Group, is India's largest
diversified retail company, operating an extensive range of both food and non-food retail interests.
Pantaloon operates grocery retail outlets under the Big Bazaar hypermarket, Food Bazaar supermarket,
Value discount store and KB's Fair Price supermarket banners. Its operations currently cover 80
cities. Pantaloon's continued expansionary activities, in terms of product development and store expansion,
as well as improving distribution infrastructure, should provide the retailer with a stronger platform to
leverage the growth prospects of the Indian MGR sector.
Tesco
Following India's decision to open up its retail sector to foreign multi-brand retailers, Tesco is going to be
the first retail superpower to take on the challenge. In January 2014, it received the go-ahead to invest US
$110mn in a joint supermarket venture with the Tata Group conglomerate. The deal sees Tesco take a 50%
stake in Tata Group's Trent Hypermarket. Tesco already supplies much of the produce in Tata's Star Bazaar
shops, and has been in partnership with Tata since 2008.
Fashion
The department store operators take a large slice of the fashion market, but there are many other players
targeting India's large, young and increasingly brand- and fashion-conscious population.
Future Group operates the Central department store outlets; and has recently sold its Pantaloon fashion
chain, with 46 stores across the country, to the Aditya Birla Group. Bata, meanwhile, has more than 1,250
shoe stores located in over 500 cities. In the footwear segment, New Delhi-based Relaxo Footwear is also
expanding.
Marks & Spencer Reliance India (MSRI) is a joint venture between British retailer M&S and Reliance
Retail, while fellow British mother and baby chain Mothercare is also present in India via the franchise
route. Italian clothing retailer Benetton, meanwhile, expects its business from India to contribute a
significant chunk of its overall revenues over the next 10 years.
Hennes & Mauritz (H&M) has been given final approval by India's government to open stores in the
country. The Swedish retailer announced in December 2013 that it planned to invest INR7.2bn (US
$115.5mn) and open 50 stores across the country. Fellow Scandinavian retailer Bestseller is reported to be
intending to apply for a licence to invest in a multi-brand retail joint venture with Bombay Rayon Fashion.
Bata
Bata is one of the leading footwear retailers and manufacturers in India with more than 1,200 stores,
including the large-format outlet in Ludhiana. Located at Westend Mall, the store occupies an area of
4,500ft
2
. The company is committed to increasing store density in tier 2 and 3 markets across the country.
Marks & Spencer Reliance India
Marks & Spencer Reliance India (MSRI) - the joint venture between British retailer M&S and RRL - has
more than 30 stores in India, and is aiming for 80 by 2016. M&S recently doubled the size of its Mumbai
outlet, and store sizes are slated to be upwards of 15,000-25,000ft
2
, even in tier 2 towns such as Pune -
M&S plans to operate in smaller and fast-growing cities such as Kochi, Baroda, Surat, Chandigarh and
Kanpur. As with the UK stores, the Indian branches offer women's, men's and children's clothing, as well as
homeware.
Glossary
BMI's household spending data are based upon the UN Classification of individual consumption by purpose
(COICOP), which is a classification system used to define consumption expenditures incurred by
households. It lists various categories and sub-categories defining the different types of groups and groups
of items that households spend on.
Where spending data is not readily allocated into the COICOP format, BMI applies a rigorous and logical
approach in allocating data to fit categories, and if needed, apply aggregation methods or other techniques
to achieve category level data.
BMI's spending data defines spending in terms of three different types of consumer units, individuals (given
as per capita), households and total economy.
Per Capita Spending - is defined as spending by each individual person.
Households - is defined as a group of people living in the same residential unit. The number of households
and average persons per household is sourced from national statistics. Where this data is unavailable, BMI
uses alternative best sources for the data, and where needed use best practice techniques to make an
estimate. Please note that Households exclude institutionalised individuals such as those in hospitals,
military religious institutions and other institutions. Where national statistics include it, BMI uses the
relevant best practice to amend the data in order to keep all countries similar with respects to their
definition.
Per Household Spending - is defined as spending by each household unit.
Below are definitions to the different indicators covered in this report. For more details on what is
included in each of the categories, please review: 'UN - detailed structure and explanatory notes', http://
unstats.un.org/unsd/cr/registry/regcst.asp?Cl=5&Lg=1
Food and non-alcoholic drinks spending - refers to the sum of food spending and non-alcoholic food
spending. Details of what is included in these categories are given below.
Food spending - refers to the sum of spending on the following food items:
01.1.1 - Bread and cereals
01.1.2 - Meat
01.1.3 - Fish and seafood
01.1.4 - Milk, cheese and eggs
01.1.5 - Oils and fats
01.1.6 - Fruit
01.1.7 - Vegetables
01.1.8 - Sugar, jam, honey, chocolate and confectionery
01.1.9 - Food products, other.
Note that refers to spending on food for home consumption and excludes food spending outside of the home
for consumption.
Non-alcoholic drinks spending - refers to the sum of spending on the following types of drinks:
01.2.1 - Coffee, tea and cocoa
01.2.2 - Mineral waters, soft drinks, fruit and vegetable juices
Note that refers to spending on drinks for home consumption and excludes drinks spending outside of the
home for consumption.
Alcoholic drinks and tobacco spending - refers to the sum of spending on the following items/services:
Alcoholic drinks spending - refers to the sum of spending on the following items:
02.1.1 - Spirits
02.1.2 - Wine
02.1.3 - Beer
Tobacco spending - refers to spending on the following tobacco products: - Cigarettes; cigarette tobacco
and cigarette papers; - cigars, pipe tobacco, chewing tobacco or snuff. Excludes: other smokers' articles.
Clothing and footwear spending - refers to the sum of spending on the following items/services:
Clothing spending - refers to the sum of spending on the following clothing items:
03.1.1 - Clothing materials
03.1.2 - Garments
03.1.3 - Other articles of clothing and clothing accessories
03.1.4 - Cleaning, repair and hire of clothing
Footwear including repair spending - refers to the sum of spending on the following items:
03.2.2 - Repair and hire of footwear
Housing and utilities spending - refers to the sum of spending on the following items:
04.1 - Actual rentals for housing
04.2 - Imputed rentals for housing
04.3 - Maintenance and repair of the dwelling
04.4 - Water supply and miscellaneous services relating to the dwelling
04.5 - Electricity, gas and other fuels
Furnishing and home spending - refers to the sum of spending on the following items/services:
Furniture and furnishings spending - refers to spending on the following items:
05.1.1 - Furniture and furnishings
05.1.2 - Carpets and other floor coverings
05.1.3 - Repair of furniture, furnishings and floor coverings
Household textiles - refers to the sum of spending on the following items:
05.2.0 - Household textiles which includes items such as fabrics, bedding, linen, kitchen and bathroom
linen, cloths and towels.
Household appliances - refers to the sum of spending on the following items:
05.3.1 - Major household appliances whether electric or not
05.3.2 - Small electric household appliances
05.3.3 - Repair of household appliances
Glass, tableware and utensils - refers to the sum of spending on the following items:
05.4.0 - Glassware, tableware and household utensils which includes items such as cutlery, flatware,
silverware, kitchen utensils, pans, non-electric household containers, waste bins etc.
Home & garden tools/equipment spending - refers to the sum of spending on the following items:
05.5.1 - Major tools and equipment
05.5.2 - Small tools and miscellaneous accessories
Goods and services for routine household maintenance - refers to the sum of spending on the following
items:
05.6.1 - Non-durable household goods
05.6.2 - Domestic services and household services
Health spending - refers to the sum of spending on the following items/services:
06.1 - Medical products, appliances and equipment
06.2 - Outpatient services
06.3 - Hospital services
Transport spending - refers to the sum of spending on the following items/services:
07.1 - Purchase of vehicles
07.2 - Operation of personal transport equipment
07.3 - Transport services
Communications spending - refers to the sum of spending on the following items/services:
08.1 - Postal services
08.2 - Telephone and telefax equipment
08.3 - Telephone and telefax services
Recreation and culture spending - refers to the sum of spending on the following items/services:
09.1 - AV, camera and computer - refers to the sum of spending on the following items:
AV equipment spending - includes television, radio and CD players.
Cameras and video cameras - includes sound recording equipment.
Computers spending - includes all types of personal computers, software and peripherals.
Recorded Media - includes recordable CD's, cassette and recording films.
AV, camera and computer repairs
09. 2 - Other major durables for recreation and culture
09.3 - Toys, sports, gardens and pets - refers to the sum of spending on the following items:
Games, toys and hobbies spending - includes items such as card, board, electronic games. Also includes
hobbies, e.g. stamp collecting, and video games.
Sport and camping equipment - includes items such as sports equipment, and game specific footwear.
Gardens, plants and flowers - also includes artificial flowers, pots and pot holders.
Pet food/products and vet fees - also includes all pet related accessories.
09.4 - Recreational and cultural services
09.5 - Newspapers, books and stationery
09.6 - Package holidays
Education spending - refers to the sum of spending on the following items/services:
10.1 - Pre-primary and primary education
10.2 - Secondary education
10.3 - Post-secondary non-tertiary education
10.4 - Tertiary education
10.5 - Education not definable by level
For more details on what is included in each of the above categories, please review "UN - detailed structure
and explanatory notes", below is a direct link to the relevant section:
Restaurants and hotels spending - refers to the sum of spending on the following items/services:
11.1 - Catering services
11.2 - Accommodation services
Personal, insurance and other spending - refers to the sum of spending on the following items
Personal care and effects spending - refers to the sum of spending on the following items:
12.1 - Personal care products spending - includes spending on hairdressing/personal grooming, small
electric appliances for personal care, toiletries and other similar products.
12.2- Personal effects products spending - refers to the sum of spending on the following items:
12.3.1 - Jewellery, clocks and watches
12.3.2 - Other personal effects
12.3 - Insurance - includes all types of personal, home, health and transport insurance.
12.4 - Other spending - which includes social protection, financial services and other similar services etc.
Household Goods (BMI only category/BMI Calculation) - is the sum of spending on: Furniture and
furnishings, Household textiles, Household appliances, Glass, tableware and utensils, Home & garden tools/
equipment, AV, cameras and computers and, toys, sports, gardens and pets.
Income Definitions
Gross Income - refers to income received before tax and deductions.
Net Income - refers to income received less any income taxes and social contributions.
Tax and social contributions, % of gross income - refers to tax plus social contribution rate as percentage
of total gross income.
Methodology
Industry Forecast Methodology
BMI's industry forecasts are generated using the best-practice techniques of time-series modelling and
causal/econometric modelling. The precise form of model we use varies from industry to industry, in each
case being determined, as per standard practice, by the prevailing features of the industry data being
examined.
Common to our analysis of every industry, is the use of vector autoregressions. Vector autoregressions
allow us to forecast a variable using more than the variable's own history as explanatory information. For
example, when forecasting oil prices, we can include information about oil consumption, supply and
capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own
history is often the most desirable method of analysis. Such single-variable analysis is called univariate
modelling. We use the most common and versatile form of univariate models: the autoregressive moving
average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality
is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for
analysis and forecasting.
BMI mainly uses OLS estimators and in order to avoid relying on subjective views and encourage the use of
objective views, BMI uses a 'general-to-specific' method. BMI mainly uses a linear model, but simple non-
linear models, such as the log-linear model, are used when necessary. During periods of 'industry shock', for
example poor weather conditions impeding agricultural output, dummy variables are used to determine the
level of impact.
Effective forecasting depends on appropriately selected regression models. BMI selects the best model
according to various different criteria and tests, including but not exclusive to:
R
2
tests explanatory power; adjusted R
2
takes degree of freedom into account
Testing the directional movement and magnitude of coefficients
Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value)
All results are assessed to alleviate issues related to auto-correlation and multi-collinearity
BMI uses the selected best model to perform forecasting.
It must be remembered that human intervention plays a necessary and desirable role in all of BMI's industry
forecasting. Experience, expertise and knowledge of industry data and trends ensure that analysts spot
structural breaks, anomalous data, turning points and seasonal features where a purely mechanical
forecasting process would not.
Sector-Specific Methodology
Within the Retail forecasts, human intervention might include, but is not exclusive to, business environment
changes; changes in consumer trends, introduction of new technology, changing fashion trends, expansion
of retail capacity/stores and industry regulatory changes. Intervention can also be necessary with respect to
the following factors: regional trends changing; demographic factors, infrastructure investments,
macroeconomic indicators; and regulatory changes. Our analysts take into consideration both macro and
industry factors when intervening, bringing together our country risk and industry knowledge to give
complete forecast of the industry.
During periods of 'industry shock', for example a deep recession, dummy variables are used to determine the
level of impact.
The retail industry data can be divided into the following main categories:
Demographics, Household Structure, CPI Breakdown and Total Household Spending.
Demographics - This covers the different types of consumers by age group, sex, and urban/rural
population. This is important in highlighting the different consumer groups and sizes of each group.
Household structure - This includes indicators such as household size by the number of people in the
household, Net/Gross Income per household/per capita, and number of households earning above $5K,
$10K and $50K. This gives a background overview of the household within a country.
CPI Breakdown - indicators on the price index and annual y-o-y change in price of all goods/services
and the main categories of spending.
Total Household Spending - across different across the main categories of consumer spending.
The categories for household spending forecasts are:
Food and Non-Alcoholic Drinks;
Alcoholic Drinks and Tobacco;
Clothing and Footwear;

Housing and Utilities;
Furnishing and Household Goods;
Health;
Transport;
Communications;
Recreation and Culture;
Education;
Restaurants and Hotels;
Personal Care, Insurance and Other.

These main categories can then be divided into the following sub-categories
Food and non-alcoholic drinks:
Food;
Non-alcoholic drinks.
Alcoholic drinks and tobacco:
Alcoholic drinks spending;
Tobacco.
Clothing and Footwear:
Clothing;
Footwear including repair.

Furnishing and home & Recreation and culture:
Household goods spending;
Furniture and furnishings;
Household textiles;
Household appliances;
Glass, tableware and utensils;
Home & garden tools/equipment;
AV, camera and computer;

Toys, sports, gardens and pets.

The following categories are forecast:
Demographics - This data is based upon World Bank and UN population levels. BMI forecasts this data
using UN and World Bank projected population levels as a benchmark while objectively and subjectively
intervening where necessary.
Household Structure - This data is forecasted objectively based upon BMI's core country specific
macroeconomic data, this includes BMI's views on population, household demographics, and GDP.
Total Household Spending - Using a selection of leading retail indicators and macro-economic data
from our Country Risk service, BMI estimates each indicator of spending individually. This can be
intervened subjectively to take into account qualitative information believed to be necessary. Once every
individual spending indicator has been forecasted, BMI then uses this information along with any other
sector and macro views, to form headline total spending indicators.
Sources
The retail sector sources data primarily from national level sources, this includes data from national
statistics, government ministries, Central Banks and industry associations. In addition, BMI uses national
sourced data in conjunction with data available from Eurostat, World Bank and UN where needed. In some
instance, where full time series data is not available, we use a combination of the above, coupled with
industry expertise, to model industry data.
Risk/Reward Rating Methodology
BMI's Risk/Reward Ratings (RRR) provide a comparative regional ranking system evaluating the ease of
doing business and the industry-specific opportunities and limitations for potential investors in a given
market.
The RRR system divides into two distinct areas:
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state
characteristics that may inhibit its development. This is further broken down into two sub categories:
Market Rewards (this is an industry specific category taking into account current industry size and
growth forecasts, the openness of market to new entrants and foreign investors, to provide an overall
score for potential returns for investors)
Country Rewards (this is a country specific category, and the score factors in favourable political and
economic conditions for the industry)
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic
profile that call into question the likelihood of anticipated returns being realised over the assessed time
period. This is further broken down into two sub categories:
Market Risks (this is an industry specific category whose score covers potential operational risks to
investors, regulatory issues inhibiting the industry, and the relative maturity of a market)
Country Risks (this is a country specific category in which political and economic instability,
unfavourable legislation and a poor overall business environment are evaluated to provide an overall
score).
We take a weighted average, combining market and country risks, or market and country rewards. These
two results in turn provide an overall Risk Reward Rating, which is used to create our regional ranking
system for the risks and rewards of involvement in a specific industry in a particular country.
For each category and sub-category, each state is scored out of 100 (100 being the best), with the overall
risk/reward rating a weighted average of the total score. Importantly, as most of the countries and territories
evaluated are considered by BMI to be 'emerging markets', our rating is revised on a quarterly basis. This
ensures that the rating draws on the latest information and data across our broad range of sources, and the
expertise of our analysts.
BMI's approach in assessing the risk/reward balance for infrastructure industry investors globally is
fourfold:
First, we identify factors (in terms of current industry/country trends and forecast industry/country
growth) that represent opportunities to would-be investors.
Second, we identify country and industry-specific traits that pose or could pose operational risks to
would-be investors.
Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/
trends to avoid subjectivity.
Finally, we use BMI's proprietary Country Risk Ratings (CRR) in a nuanced manner to ensure that only
the aspects most relevant to the infrastructure industry are incorporated. Overall, the system offers an
industry-leading, comparative insight into the opportunities/risks for companies across the globe.
Sector-Specific Methodology
In constructing these ratings, the following indicators have been used. Almost all indicators are objectively
based.
Table: Retail Risk/Reward Ratings Indicators
Indicator Rationale
Rewards

Industry Rewards

Total Household Spending, US$bn This measures the total market size or total spending power of households, a higher
score is given to countries with a higher spending.
Household Spending per capita,
US$bn
This measures total spending per person, a score is given to countries with higher
amount of spending power per person.
Household spending growth, %,
CAGR
This measures growth of total household spending over the last 5 years and tells us
whether household spending has been growing or declining. A higher score is given
to those countries that report a stronger growth in total household spending over
this period.
Country Rewards

Urban popn., % of total This measures the percentage of population that is urban. The higher the
percentage, the easier it is for firms to access a large pool of consumers. A higher
score is given to a larger urban population.
Spending popn., % of total This measures the size of the key consumer group, ages 20-39 years as a
percentage of total population. A higher score is given to countries with a large
proportion of this key consumer group.
Population, total, '000 This measures the total population in a country. A higher score is attributed to
countries with more people who can spend.
Risks

Industry Risks

Barriers to entry Measures the degree of openness and entry in the sector. A higher score reflects a
more open market.
Regulatory environment Measures the degree of regulation within the market. A higher score reflects a better
regulatory environment
Country Risks

Long term inflation Measures inflation over the past five years. A higher inflation rate hurts purchasing
power and limits the amount of goods and services bought. A higher score is given
to markets with a smaller inflation rate.
Financial risk (proxy for currency) Measures exchange rate volatility. Large scale volatility makes long term business
planning difficult. A higher score reflects a more stable exchange rate environment.
Short term political rating Denotes health of political structure, including various indicators such as policy
making-process, social stability and security/external threats and policy continuity.
A higher score reflects a more stable short-term political environment.
Short Term economic rating It evaluates likely growth trajectory over a two-year forecast period, based on BMI's
Country Risk forecasts and projections of the economy, business environment and
consumer confidence. A higher score reflects a better short-term economic
environment.
Physical infrastructure Measures the state of physical infrastructure. A higher score reflects better physical
infrastructure.
Labour infrastructure Measures the state of the labour market and working conditions. A higher score
reflects better labour infrastructure.
Source: BMI
Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal
weight. Consequently, the following weighting has been adopted:
Table: Weighting Of Indicators
Indicator Weighting (%)
Rewards 70 of which
Industry Rewards 50 of which
Total Household Spending, US$bn 33
Household Spending per capita, US$bn 33
Household spending growth, %, CAGR 33
Country Rewards 50 of which
Urban popn., % of total 33
Spending popn., % of total 33
Population, total, '000 33
Risks 30 of which
Industry Risks 40 of which
Barriers to entry 50
Regulatory environment 50
Country Risks 60 of which
Long term inflation 17
Financial risk (proxy for currency) 17
Short-term political risk rating 17
Short-term economic risk rating 17
Physical infrastructure 17
Labour infrastructure 17
Source: BMI

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Q2 2014

We expect total household spending to be US$1,204bn in 2014.

A growing middle class is boosting household spending, especially with regard to

Personal, insurance and other spending is forecast to increase by an average 12.4%

Issues such as the ineffectiveness of the executive and judiciary in controlling

Testing the directional movement and magnitude of coefficients

Food and Non-Alcoholic Drinks;

Alcoholic Drinks and Tobacco;

Clothing and Footwear;

Housing and Utilities;

Furnishing and Household Goods;

Recreation and Culture;

Restaurants and Hotels;

Personal Care, Insurance and Other.

Alcoholic drinks spending;

Footwear including repair.

Household goods spending;

Furniture and furnishings;

Glass, tableware and utensils;

Home & garden tools/equipment;

AV, camera and computer;

Toys, sports, gardens and pets.

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