Retailing in India

Industry Evolution
• Traditionally retailing in India can be traced to
– The emergence of the neighborhood ‘Kirana’ stores catering to the convenience of
the consumers
– Era of government support for rural retail: Store chains run by Khadi &
Village Industries Commission along with government owned PDS and CSD.

• In the 1980s,Textile sector with companies like Bombay Dyeing, Raymond's, S

Kumar's and Grasim first saw the emergence of retail chains

• During the same period, Titan successfully created a modern retailing concept
and established a series of showrooms for its premium watches

• Post 2000 onwards saw an emergence of organized retail formats,

– mainly in urban areas, with facilities like car parking
– targeted to provide a complete destination experience for all segments of
society

• Emergence of hyper and super markets trying to provide customer with 3 V’s -
Value, Variety and Volume

• FDI limited to 51 % in single brand retail only.

 Evolution of Indian retail formats
Historic/Rural Government Modern Formats/
Traditional
Reach Supported International

Exclusive Brand Outlets

Hyper/Super Markets
Department Stores

PDS Outlets
CSD

Mom and Pop/Kiranas

Weekly Markets
Village Fairs

Source of Neighborhood Availability/ Low Shopping

Entertainment Stores/Convenience Costs / Experience/Efficiency
 Retail Market Prediction

700 637
600
500 427
400
300
300
200
100
0

US $ Billion
2006 2010 2015

Source :KSA Technopak

What are the factors driving Retail growth in
urban India ?
 Increase in working population

 Increase in number of double income households

 Convenience

 Change in consumer lifestyle

 Incentives offered by organizations to its

employees for shopping

 Shopping + entertainment
Challenges in urban retail

1. Availability of space.

2. Competition among modern retail players.

3. Competition between traditional and modern

retailers.

4. High logistics costs.

5. Changing economic environment.

 Characteristics of rural market
1. 44 % of total villages have population of less than 500, 33
% of total villages are connected by pucca roads.
(McKinsey survey 2007)
2. Heterogenous market
3. Lower literacy rate
4. Majority of consumers in lower income group.
5. Brand conscious consumers.
6. Influencers include NGOs, panchayat members, teachers,
doctors, primary health workers.
Major players include
 ITC’s “Choupal Sagar”
 Triveni group’s “Triveni Khushali Bazaar”
 Shriram group’s “Hariyali Kisaan Bazaar”
 IOC’s “Kisan Seva Kendras”
 Godrej Agrovert’s “Aadhaar”
 HUL’s “Project Shakti”
 Mahindra & Mahindra’s “Shubh labh stores”
Challenges faced by retailers

1. Inadequate infrastructure (roads, railways)

2. Highly dispersed and thinly populated villages.

3. Inability to make large profits on products sold.

4. Supply chain problems

 Future Outlook
1. Organized retailers to focus on Tier II and Tier III
cities.
2. Rural retail will continue to remain a challenge unless
developed.
3. Future retail growth dependent on economic
situation and government policy.
4. Technology to play an important role in modern
retailing.
5. Customer retention strategies to play an important
role in highly competitive markets .

6. Consolidation, mergers and acquisitions to play an

important role.