Amnish Agarwal

Senior Vice-president, (research), Motilal Oswal Financial Services

In the past couple of months, there

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has been a definite improvement in consumer sentiment in metros, which has got reflected in the June quarter results of retailing firms.

Major retailers have seen a gradual increase in same-store sales growth on account of rising footfalls and consumer spending. Our interactions with various companies indicate a lot of hope is pinned on the festival season demand.

While we believe the demand environment today is significantly better than the third quarter of the previous year, revival in lifestyle retailing (discretionary spend) will lag value retailing due to a consumer tilt towards value-for-money purchases.

The better visibility of sales seems to have instilled confidence among retailers, as they are more certain of achieving the requisite sales/sqft in new stores. We expect companies to ramp up expansion plans in the coming quarters as low-lease rentals and consolidation of the industry offers an opportunity to garner higher shares from the consumer wallet.

De-freezing of capital flows and an improvement in capital markets will also prompt retailers to raise equity funds to make up for the lack of internal cash generation.

Wal-Mart has already made an entry into Indian retail with the launch of Easy Day stores (through their JV with Bharti Enterprises). We believe this marks an important chapter in the history of organised retail in India as Wal-Mart is known for its supply chain ruthlessness.

The transfer of technology and retail expertise could bring the best practices to the Indian market. However, we would like to observe the development for the coming one or two years before any material benefits get incorporated in the organised retail environment.