Retailing Perspectives Challenges and Opportunities

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Retailing Perspective: Challenges and Opportunities

Author: Dr. Deepanjana Varshney
Designation: Professor

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Retailing has been defined as business activities involved in selling goods and services to consumers for their personal, family or household use (Berman and Evans, 2001). The emergence of new formats and the evolution of modern retail in India has attracted attention in recent years. The business press in India has carried several articles and news items in the last three years about the modern formats (Shukla 2001; Anand & Rajshekhar, 2001; Bhattacharjee, 2001).India is a land of multiple retail formats that range from the street markets to neighbourhood kirana stores to large, very modern “bazaars”.India retail sector ,mirroring the rapid growth of the economy,is poised to cross US $ 450 billion in revenues in 2011 and touch or exceed US $ 650 million in 2016.

The purpose of this paper is to focus on three major dimensions of the Indian Retailing, namely, ❑ the changing Retail profile of India.
❑ The changing dynamics of Retailing Marketing Mix
❑ The impact of FDI on Retailing industry

Keywords: Retail format, organized retail, FDI, traditional kirana, lifestyle, evolution

The changing Retail Profile in India: Opportunities

The retail sector in India is highly fragmented, and organized retail in the country is at a very nascent stage. There are about 12 million retail outlets spread across India, earning it the epithet of a “nation of shopkeepers.” India has one of the highest retail densities in the world at 6% (12 million retail shops for about 209 million households). The rapidly emerging Indian retail sector is experiencing unprecedented growth and is being widely recognized as one of the biggest potential growth markets in the world. Since 2005, India’s GDP has been growing at a healthy rate of 7%, and retail is emerging as one of the largest and most rapidly growing sectors, with retail sales accounting for 35.4% of GDP and employment accounting for up to 5% of India’s total workforce (Reiss and Biswas, 2007). AT Kearney has ranked India as the second most attractive retail market after Russia, in its Global Retail Development Index 2004 report. Going three ranks up and surpassing China, in contrast to last year position, India has achieved the second position despite of stringent FDI rules and regulations. However, it is critical to note that most of the country’s retail is in the unorganized sector. Organized retail currently accounts for only 3.5% of the total retail market. Since 2004, this sector has been growing at a meteoric rate of 25%-30% annually. This growth in organized retail is expected to continue and is projected to contribute 9% of the total retail sector by 2010.With rapidly changing consumer aspirations, brand preferences and buying behaviour, the modern retailing is poised to be at the “take off point” in India. The key driver is booming consumer demand driven by numerous demographic, economic and social factors. Currently, more than 50% of India’s 1.1 billion population is less than 25 years old and is representative of the future consumer market India boasts. Multiple income families in India allow for higher purchasing power levels than those reflected by traditional “per capita” income indicators. India’s fast emerging middle-income class currently constitutes 22% of the total population (over 220 million) and is expected to increase to 32% by 2010. India’s urban population is expected to increase from 28% of the population in 2001 to 40% by 2011.This growth is not limited to Tier I cities; Tier II and Tier III cities are growing too, augmenting and expanding the country’s purchasing power far beyond the main metro areas. According to the India Brand Equity Foundation, India topped both AC Nielson’s 41-nation Consumer Confidence Survey for the first half of 2006 and its 14-country Asia- Pacific study. Aspirations...
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