Retail In India

Retail reality

I. Introduction:

The most promising and booming industry of future is retailing. AT Kearney, a well-known international management consultancy, recently identified India as the ‘the most attractive retail destination’ globally from among thirty emergent markets (2007). According to a Knight Frank survey, India ranks fifth amongst the 30 emerging retail markets in the developing countries.

Industry evolution

• Traditionally, retailing in India can be traced to the emergence of the Corner stores (Kirana) catering to the convenience of the consumers

• Era of government support for rural retail: Indigenous franchise model of store chains run by Khadi & Village Industries Commission

• 1980s experienced slow change as India began to open up economy.

• Textile sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim, saw the emergence of retail chains

• Later, Titan successfully created an organized retailing concept and established a series of showrooms for its premium watches

• The latter half of the 1990s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers. For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and Fountainhead in books.

• 1995 onwards saw an emergence of shopping centers, mainly in urban areas, with facilities like car parking targeted to provide a complete destination experience for all segments of society

• Emergence of hyper and super markets trying to provide customer with 3 V’s - Value, Variety and Volume

• Expanding target consumer segment: The Sachet revolution - example of reaching to the bottom of the pyramid.

• At year end of 2000 the size of the Indian organized retail industry was estimated at Rs. 13,000 crore

The retail industry is divided into organized and unorganized sectors.

Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets, retail chains, and also the privately owned large retail businesses. Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the Corner stores (Kirana shops), owner manned general stores, Cigarette stalls (paan/beedi), convenience stores, hand cart and pavement vendors, etc.

Table 1: India Retail Structure

Retail formats 2002 2003

Total Grocery Outlets 5,170,709 6,037,738

Traditional grocery outlets 4,525,264 5,273,310

Supermarkets 175 2,314

Other grocery outlets 645,270 762,114

Total Drug stores 352,786 405,743

Traditional medical/drugstores 247,582 276,058

Cosmetic stores 105,204 129,685

Source: Business world Marketing White book 2005

Retailing in India is currently estimated to be a US$ 230 billion industry, of which organized retailing makes up 3 percent.