“Organized Retail has changed the Consumer Behavior of the Indians - Myth or Reality”
Mr. Sunil Kakkar
Assistant Professor – Department of Commerce and Business Administration St. Xavier’s College
E-mail: email@example.com, firstname.lastname@example.org
An Overview of Indian Retail Sector
The retail sector has helped in giving strong impetus to overall economic growth as a significant driver of the growth of services sector, which contributes more than 50 per cent of GDP. It has strong backward and forward linkages with other sectors like agriculture and industry through stimulating demand for goods and through mass marketing, packaging, storage and transport. Moreover, it creates considerable direct and indirect employment in the economy. Also, the consumers have benefited in terms of wide range of products available in a market.
Structure of Indian Retail Sector
The retail sector is classified broadly into two:
Organised Retail Sector and, Unorganised Retail Sector
The organised segment is mainly characterized by typically large number of retailers, greater enforcement of taxation mechanisms and better labour law monitoring systems. It is not just a stocking and selling, but is more about efficient supply chain management, developing vender relationships, quality customer service, efficient merchandising and timely promotional campaigns. The organised retailing has been successful in metropolitan cities so far, more so in the south and west India . It is expected that the tier II cities would take another 5 years to absorb modern retailing opportunities. Moreover, the case for Indian retailers to explore rural markets is also strong due to the size of rural population and agricultural income growth in last couple of years. A clear indicator of this potential is the share of rural market across most categories of consumption.
The unorganised sector, on the other hand, which represents more than 90 per cent of the total retail market is mainly characterised by typically small retailers, more prone to tax evasion and lack of labour law supervision. India is one of the largest unorganised retail markets in the world and more than 90 per cent of the retailers work in less than 500 sq ft of area.
Key Players in the Retail Sector
The main players in the sector are classified as big corporate houses, dedicated brand outlets and multi-brand outlets. Some of the market leaders are:
Corporate Houses : Tatas (Tata Trent), RPG Group (Food World, Health & Glow), ITC (Life Style), Rahejas (Shoppers’ Stop).
Dedicated Brand Outlets : Arrow, Nike, Reebok, Zodiac, Louis Phillip etc.
Multi Brand Outlets : Vijay Sales, Apana Bazar, Viveks etc.
Manufacturers/ Exporters : Pantaloons, Bata, Weekender etc.
Among these, the formats like supermarkets (eg. Food Bazaars) have the highest potential for growth in India followed by hypermarkets (eg. Big Bazaar, Spencer’s).
Retail and Indian Consumers
India is witnessing innovation in store formats across categories – but are the Indian consumers aware of how and why they shop at a particular store? I am a strong believer that study of consumers starts at home – yours and mine… I also firmly believe that availability breeds consumption.
Confused? Just take a quick look at how our own families make purchase decisions! Are our purchases really well planned? Or are they usually impulse? Do we really spend time on a family budget? Are we loyal to a favourite store? Or are we opportunists? Do we get all that we want?
Well, answer to almost all the questions can be - Yes & No!
Consumer behaviour across the nation is varied. However, a recent study across various cities still shows an overwhelming patronage of local traditional outlets (kiranas) by average Indian housewife…more so for perishables. And I, for one, have observed the same trend in my immediate neighbourhood, friends and family.