India considered by many as the country of shopkeepers is true to a large extent because India has 5.5 outlets per 1000 people, which puts India in a unique position of having the maximum number of outlets in comparison to any other country in the world. Small independent outlets currently are dominating Indian scenario, in fact they contribute as much as 96% of the total retail sales. But with increasing number of nuclear families, working women, greater work pressure and increased commuting time; consumers are looking for convenience. And, convenience is defined as having everything under one roof and multiplicity of choice. This offers an excellent opportunity for organized retailers in the country. Growth & development of organized retailing in India will be mainly influenced by two factors: Price & benefits the consumers can’t resist. Economies of Scale will drive down the cost of the supply chain and increases benefits offered to the customer interface. According to A.T.Kearney (global management consultants) retail business in India for the year 2000 was Rs.400000 crore, and they estimate it will increase to Rs.800000 crore by the year 2005 an annual increase of 20 %, and Rs.20000 crore was the contribution of organized retail in the year 2000. As per A.T.Kearney from a size of Rs.20000 crore the organized retail industry will grow to Rs.160000 crore by 2005 (estimated). Retail today is on the thresholds of a revolution fuelled mainly by a paradigm shift in consumer behaviour & the availability of cutting edge tools. India is rapidly evolving into an exciting & competitive market place with potential target consumers for both segments (niche & middle class). The market trends indicate tremendous growth opportunities. Indian consumer & retail market has seen a tremendous amount of interest from global majors as well. Over the years many international brands like Lacoste, Mc Donald’s, Swarovski, Domino’s amongst a host of others have come in. Big Indian Corporates who were earlier not into retailing are investing heavily and entering this industry. The potential in this sector is huge.

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Organizations ready to take this challenge can leverage the opportunities offered by the population of hundred crores.The prospects are very encouraging. Lifestyles in India are changing and the concept of “Value for Money” is picking up.  A report from the Center for Monitoring the Indian Economy, says investments in organized retailing — which include shopping malls, retail chains, etc– has doubled from RS.1000 crore in January 2000 to RS.2000 crore in January 2001.

The Road Ahead

Successful retailers of the future will be those, who invest in predicting consumer wants and needs, who develop innovative solutions to address those needs and who create organizations poised to capitalize on changes as when it occurs.

What retail might look like in India?

Thanks to a massive population and indications of better levels of disposable incomes side by side with awareness emerging, retail is being seen as a massive emerging opportunity in India. Naturally, since retail revolutions took place in the more developed markets much earlier, the feeling is that India can draw from their experiences. Although, given India’s own unique characteristics, expectations are that as the retail scenario evolves (surely rapidly now), the country will emerge with its own retail models as well. Yet, consultants say that there are enough models out there in the developed part of the world that will find acceptance here, even though they may find some modifications to suit local needs better. The challenge, really, is in the re-invention.

There are certain formats these consultants feel can work in India:

  • Small stores, with complex but efficient supply chains
  • Small supermarkets that run on brand variety and tight inventory control
  • A mix of food and general merchandise stores
  • Out-of-town shoppatainment complexes
  • Mid-sized retail propositions within town limits
  • Small corner outlets with integrated home delivery

Effectively, then, leaving out hypermalls of the US kind, other retail models are possible in India, though a model cannot really be moved across borders piecemeal. What can come in piecemeal, however, is the supply chain management model attached to a broad model that is being transferred. Again, consultants say that you have to build on what’s already there — you can’t just wipe the slate clean and start afresh. And so the likes of catalogue or mail order buying will not necessarily lose significance. Make it more efficient and it can work. However, since in a lot of product categories, the consumer may prefer a touch-and-feel before taking a decision, display outlets sans on-premise stocking can support these kinds of formats. Take your pick, order and get it all delivered at home. E retailing could also adopt something like this combination. There are no strict rules anywhere, anymore. And rural India? Maybe that’s where a modified multi-product hypermart could work, is the opinion. And the best model? No, there are no ideal models – adopt/adapt/develop the best fit from what’s out there in the West. And here in India. The bottom-line: there are basic commonalities in retail evolution in any market. As incomes rise, value additions go up. As value adds go up, retail models gain significance. And then come shakeouts and consolidations. That’s the ground reality. You just can’t shake that.

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0 Comments
  1. vagragenericaar.org 2 months ago

    Thank you.

    Youseful blog. Good post.

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