Demand Drivers of Organized Retailing



Demographic dividend:

In India, the “demographic dividend” which manifests in the proportion of working age group of 15-64 years will be increasing steadily from 62.9% in 2006 to 68.4% in 2026.11 The age group of 15-40,which is the target segment for most of the marketers, accounted for 61% of the 46 crore economically active population in 200712. The young demography has in turn aided the demand of aspiration and lifestyle products.


Key Success Factors and Risk Factors


1.    Efficient Supply Chains:

Highly fragmented supply chains coupled with infrastructure issues and the vast geographical spread of the Indian market pose huge challenges to the retailers. Indian retailers have to enhance their supply chains to succeed in the cost conscious market. Segments such as food and grocery have to cope with very highly unorganized supply chains. Also, the rising customer expectations would necessitate supply chains with quick reaction times.


2.    Ability to penetrate rural market

The urban area has been the focus of Organized Retail which has led to increased competition. Rural India is home to 72 crore consumers across 6 lakh villages. 17 % of these villages account for 50 % of the rural population as well as 60 % of rural wealth. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV), Choupal Sagar (ITC), Kisan Sansars (Tata), Reliance Fresh, and others such as the Naya Yug Bazaar have already ventured into the retail market.


3.    Leveraging Technology:

The Organized Retail layers have to leverage IT and technology to sustain business growth through innovation and differentiation. A numbers of retail players like DLF Retail, Khadims, and Diamexon Diamonds have expanded their SAP footprints is to simplify business processes, reduce costs and adapt to the changing industry landscape. GPS and RFID technology can help in logistics and inventory management.


4.    Customized solutions

The Indian retail market is very heterogeneous in nature. The dynamics for various segments change with the geography and other cultural factors. The challenge for the retailer is to keep this heterogeneous nature of the target market in mind and to balance it with other issues like economies of scale.


5.    Customer Relationship Management (CRM)

The retailers have to come up with innovative CRM activities to retain their customer base and to add on to their brand value. CRM activities like loyalty programs have been received well by the customers in the past


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