Professional Documents
Culture Documents
Bazaar: Organized Retail Comes of Age in India’. The report discusses various
issues related to retail in India like future growth, real estate implication, supply
chain issues, Human resource management, changing customers' demographics
and tastes etc.
Fig. 1: Rising
Income to increase consumerism growth
The country’s overall retail sector is expected to grow to $450 billion (Rs20.85
trillion) business by 2015. It is almost comparable to Italy’s current market size of
$462 billion (among the world’s top 10 retail markets) and larger than Brazil’s
current retail market size of $258 billion. If we go by another McKinsey report
“The rise of Indian Consumer Market”, this consumer market is expected to be
quadrupled by year 2025.
The consultancy major McKinsey's retail report entitled 'The Great Indian Bazaar'
pictures Indian market as full of opportunities yet highly competitive in nature. It
talks about uniqueness of Indian consumers which separates them from rest of
world in some aspect. For example, Indians generally don’t prefer packaged
vegetables and fruits as they associate them with lack of freshness, whereas in US,
packaged vegetables are very popular. According to report, Global players looking
to enter the Indian retail market need to customize their retail model rather than
apply same store model which worked elsewhere.
Fig. 2: Customer
Winning Chain
When question of loyalty to one retailer comes, Indians are perhaps the smartest
in seeking value themselves rather than relying on single retailer. This makes life
of retailer more difficult in India. Also, shoppers in India place a lot of importance
on convenience. Around 64% buyers surveyed said they do not mind paying extra
for conveniently located stores, compared with 31% in China.
So Indian consumer habits and environmental factor will require retailers to adopt
and evolve an approach that is distinct from the rest of the world and to customize
their operations. To achieve success in the market, players would have to address
real estate issues, create an efficient supply chain as per local condition, increase
their share in consumer’s wallet, develop and retain talent, influence regulation to
ensure healthy development of the sector. So innovation will key of success here.
information technology & outsourcing, retail is going to be the next big thing in India. Experts
are predicting a gigantic shift from unorganized to organized retail. So, Indian retail is sitting at
the threshold of a total makeover. At this critical juncture – this article gives a brief overview
about past and present of Indian retail and then tries to find out what the future has in store.
The Past
The history of Indian retail dates back to ancient days when small
scale retailers used to carry their offerings to the village fairs and weekly markets. These fairs
used to be more of a community gathering for enjoyment than for buying and selling. Still, fair
amount of sales used to generate good revenue for those small scale retailers who used to sell
their products in those early-day markets.
With changing times, society became more organized and sophisticated. Business and trade
started growing. As an integrated part of this, retailing also came into picture in the form of small
neighborhood stores. They sell all daily necessary commodities from grocery to all other house-
hold needs. With time, they have grown not only in numbers but also in product portfolios. They
are still the heart and soul of Indian retail business.
Only in recent years Indian consumers got the taste of shopping malls and super markets. The
basic differences of these shopping malls & super markets from traditional mom & pop stores
are that –
• They are much bigger in terms of size & product assortment and
• They are far more organized in terms of both infrastructure as well as operations.
Supermarkets, hyper markets, departmental stores, specialty stores, discount stores and
convenience stores are all basically modern day retail stores.
The Present
Current Scenario:-
• Till date, Indian retail industry is very much fragmented. Most of Indian retail stores are
small (floor space less than 500 square feet) mom & pop stores and they are located near
residential areas.
• According to Indian Retail Report 2007 – in the calendar year 2006 organized retail
business was worth $12.4 billion which was 4.6 % of $270 billion Indian retail industry.
• Food & grocery sector forms the largest block of Indian retail market. Clothing & apparel
sector comes next. But surprisingly, “time-wear” segment is the most organized segment with
nearly 46% of the segment being organized.
The Future
Opportunities:
• Organized retailing in India is projected to grow at the rate of about 37 per cent in 2007
and 42 per cent in 2008 and by 2010 it would be around $45 billion.
• Indian GDP is growing at the rate of around 9% next only to China. This translates to more
disposable income at the hand of the consumers. They are also willing to spend for quality
products. Traditional mindset of “Save Now, Enjoy Later” is changing to “Right Here, Right
Now”.Burgeoning middle-class with increasing income and spending is surely going to
bring smiles in the face of retailers who can serve to consumers’ palates.
Challenges:
• In India, most people do their day-to-day shopping in neighborhood stores and this habit
is not going to change overnight. But almost all major Indian cities are already very much
congested. Moreover, real estate costs are also sky-rocketing. Hence, establishing large retail
stores in a proper location is going to be a major headache for the big daddies of retail.
• India is a vast country with huge cultural and socio-economic differences between different
regions. So, a company cannot apply ‘one size fits all’ kind of game plan to the whole country.
Many global retail Big-Wigs are lately entering Indian market. For them, understanding of
the local market & behavior of Indian consumers and then synchronizing their business
model is not going to be an easy task.
• India scores very poorly in terms of trained professionals for retail industry. With
increasing demand, the situation will become more deplorable if serious initiative is not taken
immediately for developing quality skilled man-power.
• Infrastructure will become a major impediment to growth of any emerging industry in
India if not taken care of immediately.
Focus Areas:
• The 4 P’s of Marketing – product, price, placement and promotion plays a significant role
in any business worldwide and Indian retail industry is going to be no exception.
• Global business paradigm is shifting from products to consumers and retail being
a consumer centric business – importance of Customer Relationship Management will only
increase with time.
• Along with the products, Indian consumers are also becoming concerned with service. The
success story of Multiplexes and Malls speaks for this. So, “in-store ambience and experience”,
“customer delight”, “loyalty programs”, “value-added services” et al. will become key
differentiators between “market leaders” and “also ran” companies.
<!–[if mso & !supportInlineShapes & supportFields]> SHAPE \* MERGEFORMAT <!