Rural Retailing in India

Topics: Retailing, Household income in the United States, Population Pages: 12 (4302 words) Published: March 30, 2012
Rural Retailing in India-The Road Ahead
Shikhar Das Srivastava*

ABSTRACT The decision to liberalize the Indian Economy in 1991 had far reaching consequences, which is still continued into the new millennium also. On the marketing front, there was the arrival of many well-known Multi National Companies especially FMCG product dealers. In the initial years the focus was on the easily accessible well developed urban markets but soon it got saturated because of proliferation of brands and intense competition, resulting in the near saturation of the urban market. This forced companies to look for greener pastures, i.e. new markets. All eyes turned to the world’s most promising potential markets of 742 million rural consumers who had yet to taste the fruits of modernity, a promise that seemed ready to be fulfilled because of explosion in buying capacity in rural sector. Rural markets are proving to be vital for growth of most companies. Priority to develop the rural markets and sincere efforts to overcome the difficulties would open the floodgates, offering tremendous potential for growth. This paper will reveal such major opportunities existing in rural sector for many major retail players and how they are cashing the present and future gains out of that.

*Assistant Professor, Babu Banarsi Das University, Lucknow


Rural Retailing in India-The Road Ahead
Shikhar Das Srivastava*

1. Introduction: Even after independence, Indian economy is still being dominated by agriculture sector and the major reasons behind this- (i) its contribution in food grain production which is consumed by both rural and urban market and (ii) self-employment. Considering this fact, Central Govt. and other State Govt. have been emphasizing developments of rural areas through investments in different sections like infrastructure, agricultural technology and farm productivity. In addition to this private investors also considering rural as Creamy sector and dominantly supposing as processing and consumption centers. The demand for production and consumption of goods in rural areas has increased substantially (two-third of country’s consumers live in rural areas) both for household and industrial goods i.e. farm equipment and machinery, high yield varieties of seeds, fertilizers, pesticides, detergent, personal care product, television etc. Another picture of rural economy is the percentage increased in output namely food grains, fruits and vegetables, milk, poultry products, handloom and handicraft products that almost generate half of the India’s National Income. All these elements are raising the opportunity of retailing in rural. 2. Description of rural market 2.2-What is Rural Area or Market? There could be numerous approaches and methods in defining Rural Area/Market. All villages with a population of less than say 4000 or 5000 (or a population of 5000 plus

* Assistant Professor, Babu Banarsi Das University, Lucknow 2

a population density over 400 per sq. meter with at least 75% of the male workforce engaged in non-farming activities) will be considered as rural area. Later on a new and pure definition of rural area came up as- an area/s having population of less than 5000, 75% of the population engaged in agriculture, 50% of the national income is generated by the rural population and 2/3rd of the country’s consumer lives in rural territory can be considered a rural area. 2.3- Retail prospects in Rural India: Rural India accounts for roughly 70% of the population where 6, 38,000 villages and 593 districts consist of 742 million people. 15% of rural population lives in 20,000 large “non urban” areas with population more than 5,000 people. 63% of rural population lives in villages of 1000 to 5000 people. Remaining 3, 90,000 villages have fewer than 1000 people accounting for 22% of the population. Growth in agriculture has resulted in the rapid rise of rural incomes which results in the rise of consumption pattern especially for...
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