Indian Streams Research Journal

Vol - I , ISSUE - X November 2011 ISSN:-2230-7850

Retailing – The Changing Trend in Indian Market

Khot subhash shamrao

Assistant Professor in Commerce
Senior college patpanhale
A/p- Shringartali, Tal- Guhagar, Dist- Ratnagiri

Abstract:

The Indian retail industry is the second largest in the world. Comprising of organized and
unorganized sectors, India retail industry is one of the fastest growing industries in India,
especially over the last few years. Though initially, the retail industry in India was mostly
unorganized, however with the change of tastes and preferences of the consumers, the industry is
getting more popular these days and getting organized as well. With growing market demand, the
industry is expected to grow at a pace of 25-30% annually. With the tremendous growth of
economy, retail management has emerged as one of the fastest growing careers in India. The
enormous expansion in the retail sector during the past few years has thrown up a big demand for
skilled professionals in the field.

Introduction

In India why retail sector become boom? Because, India is a big market and World’s
second largest populated country in the world. So every big player wants to enter in Indian
market. Retailing is one of the pillars of the Indian economy. Retailing has captured the
imagination of the nation. Retailing has become the buzzword in today’s business circle. From
the petty traders at street corners retailing has assumed enormous proportion which lies beyond
imagination. The word Retailing has become synonymous with big shopping malls, huge
supermarkets, department stores and large discount stores that have become the one-stop-shop
for all needs of customers under one roof. It combines convenience with variety and price
reasonability which considerably changed buying scenario of the consumers.
The Indian retail industry is all set to grow manifold as several big names have already
entered the fray and many more are waiting to chip in with huge investments. Several leading
foreign retailers are also eyeing the Indian market and scouting the Indian patterns to establish
their franchisees on the Indian soil.

Objectives of Research Paper

1. To know the emerging trends in Indian retail industry.

2. To identify the drives of changes in organized retailing.

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Vol - I , ISSUE - X November 2011 ISSN:-2230-7850

Research Methodology

This paper is based on secondary data collection. All the data used for the purpose of this
research has been sourced from various sources like research paper, newspaper, Paper Articles,
websites and books.

Retailing Scenario in India

Retailing began several thousand years ago with peddlers hawking their wares at the earliest
marketplaces. The diversity of retailing is evident in the many forms as it now takes. It includes
vending machines, door to door and telephone sales, direct mail marketing and so on. Because of
the increasing number of nuclear families, working women, greater work pressure and increased
commuting time, convenience has become a priority for Indian consumers. They want everything
under one roof for easy access and multiplicity of choice. This offers an excellent opportunity for
organized retailers in the country who account for just 2% of the estimated US $ 180 billion
worth of goods that are retailed in India every year. Presently there are 1500 super markets,
11025 departmental stores & 300 shopping malls having 45 million square feet area of retailing
space. The retail industry in India is contributing 10% of the GDP & 8% of the total
employment.

Growth of Retailing (Rs.Crores)

Year Retailing business sales (Organized

Sector)
1999-2000 5000
2003-2004 15000
2005-2006 35000
2009-2010 60800

Source Economic Times January 29th 2010.

If we compare the Indian retail industry with USA there is wide gap. In 2004 the US
Retail Market was of $3 Trillion, on the other hand India’s Retail Market was only $180 Billion.
The employment generated by US Market was for 22 million people and Indian market provided
it to 15% of the Indian adults. The percentage of our organized retail market is only 2%, but it is
80% in USA. The retail sales of Indian retail market are $202.6 Billion which is less the Wal
mart (USA) the second largest in world which has 256 Billion sales & also employed 10 lakh
employees in USA & 3 lakh employees internationally. Although Indian Retail Industry is 25
tears lagging behind the USA It will take just 5 years to fight back the competition.

Comparison between US & Indian Retail Industry

Particulars US Retail market Indian Retail market

Total Sales per Annum $3 Trillion $180Billion
Employment Generated 22 Million People 15% of Indian Adults
Organized Retail Market 80% 2%

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Vol - I , ISSUE - X November 2011 ISSN:-2230-7850

Total No. of Major Retail Stores 1,20,000 20,000

Contribution to National Income 33% 40%
Source: Marketing Master Mind, August 2004.

Retail Sector is most upcoming sector in Indian Economy. Many biggest players are yet
going to enter in the industry soon. It is on the threshold of revolution after Information
Technology sector. The organized retail sector has grown approximately 6% from earlier 2% of
the world with the increase of approx. 20-25% of pace. The current growth rate is estimated to be
around 8.5%. There are about 300 new malls, 1500 super markets, 325 departmental stores
being expected and build soon.
he growth and development of organized retailing in India is driven by two main factors-
lower prices and benefits of consumers. India is the 9 th largest retail market in the world. As the
employment rate is increasing and the economy is growing by 8 to 9% with total sales of US $
6.6 trillion, retailing is the world’s largest private industry ahead of finance and engineering.
Some of the world’s largest companies are in this sector.( over 50 fortune, 500 companies and
around 25 of the Asian Top 200 firms and retailers) Wal-Mart, the world’s second largest
retailer has a turnover of US $ 260 billion, almost 1/3 of India’s GDP. Many as 10% of the
world’s billionaires are retailers.

Share of Retailing in GDP & Employment

In late 1990’s the retail sector has witnessed of transformation. Retailing is being
perceived as a beginner and as an attractive commercial business for organized business i.e. the
pure retailing to emerge now. Organized retail business in India is very small but has tremendous
scope. The total in 2005 stood at $ 225 billion, accounting for about 11% of GDP. The
employment opportunities created by retail marketing was 6-7% of the total employment in
India. India’s retail industry is the second largest sector, after agriculture which provides
employment. According to Associated Chambers of Commerce and Industry of India, the retail
creates 50,000 jobs in the next few years.

Organized Retailing

The organized sector is expected to grow faster than GDP growth in next few years
driven by favorable demographic patterns, changing lifestyles and strong income growth. This
sector includes supermarkets, hypermarkets, discount stores and specialty stores. The organized
retail segment has the urban, high income group as its core customer base. The organized retail
sector is trying to grab the share of the unorganized sector by focusing on rural India which
forms 2/3 of the unorganized sector. Capturing the rural customer base can exceptionally spike
the organized sector share. Retailing in many developed countries is having more business and
better than in India.

Unorganized Retailing

In India most of the retail sector is unorganized. The organized sector accounts for 6%
share, whereas 94% share is contributed by the unorganized sector. The main challenge facing by

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Vol - I , ISSUE - X November 2011 ISSN:-2230-7850

organized sector is the competition from unorganized sector. Unorganized retailing has been
there in India from many centuries, these are named as mom-pop stores.

Forecast or future of Retailing

Traditionally retail has not been a structurally organized industry. Currently there are
near about 51, 30,000 retail centers selling about 4390 billion worth of products. Indian retail
market grows due to the following strategic factors. The factors responsible for the development
of retail sector can be broadly summarized as-

 The availability of credit and the reduction in rate of interest has lead to a boom in real estate
making a way for establishment of new shopping malls.
 Improving standard of living and constant economic growth with good jobs and handsome
packages. The ultimate credit goes to the BPO industry which provides jobs for young graduates
and part time jobs for undergraduates. Their favorite places to spend salaries are the shopping
malls.
 Working women to a great extent has contributed to increasing standard of living by using credit
cards of banks.
 Shift in consumer demands to foreign brands like McDonalds, Sony, and Panasonic etc.
 Reduction in import duties offering more global sourcing options.
 Rising incomes and improvements in infrastructure are enlarging consumer markets.
 Liberalization of the Indian Economy which has leaded to start up the markets for consumers.
 The intern ate revolution is making Indian consumers more accessible to the growing influence
domestic and foreign retail chains. Reaching of satellite TV channels is helping in reaching
global products for local markets.
 About 47% of India’s population is under the age group of 20, which will immensely contribute
to the growth of retail sector.
 Availability of quality real estate and Mall Management Practices.
 Foreign companies attraction to India as the billion-plus population.

Challenges before Retailing in India

In India the Retailing industry has a long way to go, and to become a truly flourishing industry,
needs to cross the following hurdles.

 The first challenge facing by the organized retail sector is the competition from unorganized
sector.
 Automatic approval is not allowed for foreign investment in retail.
 Regulations restricting real estate purchases and cumbersome local laws.
 Absence of developed supply chain and integrated IT management.
 Low skill level for retailing management.
 Intrinsic complexity of retailing- rapid price changes, threat of product obsolescence.
 Lack of technical know-how.
 Absence of retailer friendly law.
 Lack of trained work force.

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 Limited space& fewer infrastructures.

Remedies on Retailing

To face the above challenges following mantras / remedies are suggested.

 Focus on consumer needs.
 Think that customer is always right.
 Develop private label brand.
 Make customer feel proud while company your Brand.
 Well managed leisure experience must give to customer.
 Target at all members of the family.
 Compromising of shopping, dining and entertainment all less than one roof.
 Offer wider range of products and services.
 Use effective visual communication for customers.
 Retailer must use door-to-door advertisement campaign to attract customers.

Conclusions

In India the retail sector is the second largest employer after agriculture, although it is
highly fragmented and predominantly consists of small, independent owner- managed shops.
There are over 12 million retail outlets in India, and organized retail trade is worth of Rs. 12,
90,000 core (September, 2003). The country is witnessing a period of boom in retail trade,
mainly on account of a gradual increase in the disposable incomes of the middle and upper-
middle class households. More and more corporate houses including large real estate companies
are coming into the retail business, directly or indirectly in the form of mall and shopping center
builders and managers. New formats like super markets and large discounted departmental stores
have started influencing the traditional looks of book stores furnishing stores and chemist shops.
The retail revolution, apartment from bringing in sweeping, positive changes in the
quality of life in the metros and cities is seen today. For the retail sector to achieve further
growth, the spread of organized retailing has to become a national phenomenon. According to
KSA Techno Park, a leading consulting firm, the organized sector will grow to almost Rs.
30,000 cores by 2008, representing 6% of the total retail market. The top 6 cities will account for
66% of total organized retailing. Although many international retailers and brands still realize
India is too difficult, they would welcome the opportunity to create appropriate joint ventures, if
they felt India was changing. The growth of the organized retail industry in the country will
mean thousands of new jobs, increasing income levels and living standards.

References

Books

1. S.N. Mitra. “Retail Management”. Pointer Publishers. 2007

2. Swapna Pradhan (2007), ―Retailing Management‖- Text & cases, 2nd edition, The Mc. Graw
Hill

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3. G. G. Vedamani, “Retail Management – Functional Principles & Practices”, Jaico Publishing

House, 2007.
4. Oppurnity India Retail - By Sandeep Roy
5. The Real Story of Indias Retail Boom- Business Outlook Jan. 07.
6. Retailing Management- By Levy Michel Published by Tata-Mc-Hills-2002.

Others Resources

1) www.retailguru.com
2) A.T. Kearney’s Report on Indian Retail, 2008
3) www.indianrealtynews.com
4 ) www.retailguru.com