Indian Retail sector Information

Topics: Retailing, Shopping mall Pages: 12 (3504 words) Published: May 23, 2014
SIT Journal of Management
Vol. 3. No. Special. November 2013. Pp. 1-11

1

A Comparative Study of Organized and Unorganized Retail Sectors in Bangalore
Mihir Dash* & Sam Chandy**
Abstract
This study analyzes the challenges and opportunities faced by organized and unorganized retail players in Bangalore. It was found that organized retailers see competition from the unorganized sector as their biggest challenge, followed by competition between organized retailers and the inefficiency of distribution channels, internal logistical problem and retail shrinkage, while unorganized retailers see organized retailing as their major challenge, followed by cost of operation, logistical problems, competition between other kirana retailers and inefficient distribution channels. It was also found that organized retailers see Bangalore‟s growing middle class as their greatest opportunity followed by large number of earning youth customers, Bangalore having people from all over India, proportionate increase in spending with earnings and India‟s booming economy, while the kirana retailers see Bangalore having people from all over India as their biggest opportunity, followed by Bangalore‟s growing middle class, India‟s booming economy, large number of educational institutions in Bangalore and proportionate increase in spending with earnings. Thus, the study found that the major challenges as well as opportunities of organized and unorganized retail are almost the same. This means that mitigating the challenges and leveraging on the opportunities could benefit both sectors.

Keywords: retailing, organized and unorganized retailing, competition, distribution channels, logistics, retail shrinkage, cost of operation.

*Mihir Dash, School of Business, Alliance UniversityChikkahagade Cross, Chandapura-Anekal Road,Anekal, Bangalore-562106e-mail: mihirda@rediffmail.com, M: +91-9945182465. **Sam Chandy, Vice President, Operations, Supercold Refrigeration Systems Pvt. Ltd. Industrial Estate, Manvila, Kulathur P.O.Trivandrum, Kerala – 695583.

Dash & Chandy
ISSN: 2278-9111
Electronic copy available at: http://ssrn.com/abstract=2403858

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SIT Journal of Management
Vol. 3. No. Special. November 2013. Pp. 1-11

Dash & Chandy
ISSN: 2278-9111
Electronic copy available at: http://ssrn.com/abstract=2403858

SIT Journal of Management
Vol. 3. No. Special. November 2013. Pp. 1-11

3

Introduction
Indian retail is expected to experience tremendous growth in coming years, and is already labeled as the sunshine sector in India. The Indian retail sector can be broadly classified into the organized and the unorganized retail sectors. The unorganized retail sector typically consists of small-time family-run retail outlets popularly known as „mom and pop‟ stores or kirana stores. The organized retail sector typically consists of large retailers with large numbers of outlets, product assortment, customer convenience, and so on.

The organized retail industry in India is estimated to be an impressive US $518 billion in 2012, and has been growing at 10.6% over 2011-12. However, the retail market in India is the most fragmented in the world. Only 8% of the entire retailing business in India is in the organized sector, and this share is expected to grow to 20% by 2020. However, this growth may be impossible without overcoming the numerous challenges faced by the industry.

Organized retail is in the stages of finding its feet in India even now. Organized retail trade makes up over 70-80% of total trade in developed economies. India‟s retail contribution is quite low even when compared to other developing Asian economies like China, Thailand, South Korea and Philippines, all of which have retail contributions close to 20-35%. These figures quite clearly reveal the relative underdevelopment of the Indian organized retail sector.

Challenges faced by Organized Retail Sector in India
The organized retail sector in India is still at a...

References: 1) Aggarwal, S. (2008), “Rising Mall Rentals in Major Cities Dampen Retailer‟s Early
2)
Banerjee, R. and Balakrishnan, R. (2008), “Second Tier Retailing is a Smart Idea,” The
Economic Times, 6th February 2008
Berman, B. and Evans, J.R. (2003), Retail Management: A Strategic Approach, 9th Ed,
Prentice Hall Publ.
Chadha, A.S. (2008), “India Most Attractive Retail Destination in the World,” The Economic
Times, 19th March 2008
Freathy, P. (2003), The Retailing Book: Principles and Applications, Prentice Hall
Guha, R
Singhal, A. (2007), “Impending Economic Impact of a resurgent Indian retail sector,”
Technopak report on organized retailing in India
Writangar, M. (2008), “Frauds steal retail show,” The Economic Times, 22 January 2008
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