India Chosen as Hot Market by Global Retailers

India is the second most attractive country among 30 emerging markets for international retailers due to strong economic growth that has raised standards of living and led to a sharp jump in retail sales, particularly of diamond jewelry.

India has pushed past China and is behind Russia in its attractiveness to retailers, according to international management consultant AT Kearney‘s Global Retail Development Index.

Retailers including Wal-Mart, the largest global retailer and largest seller of jewelry in the United States, would be interested in entering the Indian market if investment regulations, which bar foreign investment in the retail sector, were relaxed.

Italian luxury retailer Bulgari in March opened a store in New Delhi, its first presence in India, where it is selling watches, jewelry collections and accessories, citing a fast growing consumer market for luxury goods.

India’s diamond jewelry market, estimated as being worth around $1 billion, is seen as having the potential for strong growth due to economic expansion that has helped increase the middle class segment of the population. That has led several Indian jewelry firms, such as branded jewelry firm Tanishq, to launch retail expansion plans.

In addition, in what is claimed to be one of the largest diamond alliances in the world, four of India’s top diamond companies came together with OyzterBay, a branded jewelry-retailing venture, earlier this year.

The four firms – K.P. Sanghvi’s Ace, M. Suresh’s Adora, Poddar’s Sparkles and D’damas, a joint venture between Dubai-based Damas and Digico Group – have a turnover of more than $2 billion. The firms see the alliance as a way of increasing their share of India’s jewelry market that is growing at a rate of 15 percent annually.

AT Kearney said that after a fallback in retail growth last year there has been strong global expansion this year with the most significant growth taking place in emerging markets, with about two-thirds of global retailers interviewed planning to increase their business activity in those countries.

India’s Gross Domestic Product – the total value of goods and services it produced – soared 40 percent between 1999 and 2003 while retail sales jumped by a third during the same period.