Retailing- the rising sector in Rural India

Amita Koli 1 and Amrita Jadhav 2

Assistant professor, St.Andrew‟s College, Bandra, Mumbai E-mail: 2 Assistant professor, Annasaheb Vartak College, Vasai Email:

ABSTRACT Retailing means the last in the chain of distribution channel. Retailing is itself opening new vistas to grow in the small sector. Indian retailing is one of its kind there is 97% of retailing which is unorganized and 3% organized this combination makes both ever growing and ever-changing with time. Agriculture though remains the primary occupation in rural India if any other activity takes the burden of tackling the issues of cyclical unemployment, unproductive agriculture, rural indebtedness and poverty which are the outcome of over dependence and overburden of excessive population on agriculture as single most occupation in rural India ``Rural India going Global’’ is 21st Century’s emerging slogan. Rural India remains untouched and sidelined when it comes to some paradigm and meaningful development which should provide with effective, true and consistent growth of rural sector. This research paper gives us the platform to at least provide a crack to such debatable and vicious problems growing with rural India. About 70% of India’s population resides in villages. In 2010, India’s population has crossed the 1.2billion, the second highest after China. This means about 840 million people live in villages of India, where in rural area the lion’s share is 600000 villages with scattered population and 4000 cities and town with concentrated crowd from urban population. In this research paper we have tried to bring out the fact that retailing as a sector is growing by leaps and bounds and rural markets provide retailing a fair chance to flourish

Keywords: Rural India, Retailing, Indian rural market.
INTRODUCTION Retailing includes all the activities involved in selling goods and services directly to the final consumers for personal, non-business use (Philip Kotler, Kevin Keller, Mairead Brady and Malcolm Goodman 2009).A retailer is any person or organization that offers something for sale to final consumers. Organized retailing has increased from 3% in the year 2004 to 9% in the year 2010 as per the source NCEAR, TSMG Analysis (2010). Organized retailing also VOLUME NO.1, ISSUE NO.2 17 ISSN 2277-1166

India offers a huge. lack of transportation and lack of stock management makes it easy to go for retailing in Indian rural markets. sustainable and growing rural market which can be tapped effectively through innovative distribution channels with retailing being the most critical element of this strategy as it is the final touch point and the actual touch point with the customer which can be the most critical influence in the buying process. Rural India is undergoing sea change where in the literacy called modern retailing is they exist in the forms of malls. The rural bazaar is booming beyond everyone‟s expectation. unproductive agriculture. lack of storage. In addition. Agriculture though remains the primary occupation in rural India if any other activity takes the burden of tackling the issues of cyclical unemployment. and large departmental stores. chain shops. rural indebtedness and poverty which are the outcome of over dependence and overburden of excessive population on agriculture as single most occupation in rural India.ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN COMMERCE & MANAGEMENT www. an estimated induction of Rs 140 billion in the rural sector through the government‟s rural development schemes in the Seventh Plan and about Rs 300 billion in the Eighth Plan is also believed to have significantly contributed to the rapid growth in demand. The Dukandars and kiranawalas seem undying Indian modern retailing. Organized retailing is making rapid progress with the growth rate of 4550% per annum.2 18 ISSN 2277-1166 . income and saving patterns are on toll this passes a strong message that rural India is opening up as market full of consumers and potentials to further uplift the economy.abhinavjournal. skilled manpower. The possible way out from our views is retailing. Evolution of retailing in India: Traditional formats Itinerant salesman Haats Moles Mandis Established formats Kirana shops Convenience/Multi Brand Showroom PDS Co-operative stores Emerging formats Exclusive retail outlets Hypermarkets Malls/Specialty Malls MultiplexesRural oriented formatsFast food outlets VOLUME NO. Mall culture is one of the significant outcomes of modern and organized retailing which is lately making urban crowd delighted and rural crowd almost craving for its glimpse. Retailing is upcoming as one the major non farming occupations in India. with this growth rate the share of organized retailing in total business may reach to16% or more or even more by 2011-12. Issues with wholesaling as lack of huge investment. tastes are also changing. This has been primarily attributed to a spurt in the purchasing capacity of farmers now enjoying an increasing marketable surplus of farm produce. where in rural areas development policy gets its place in policy formation but less in successful and fruitful policy implementation. The high incomes combined with low cost of living in the villages have meant more money to spend. no doubt it is widespread and reachable to consumers. And with the market providing those options. Mom and pop shops cater to the largest network of consumers both in rural as well as urban areas. ISSUE NO. Doubtless that markets and consumers are bringing in areas of business opportunities to make it possible. Rural and urban divide is widening because urban development over rural development been given priority which also becomes an easy catch for governments to at least boast over their development made in urban areas for five years of their tenure.1.

journal. Retail scenario in India It is crystal clear that retailing is opening new avenues for the country to grow in urban as well as rural India but in retailing certain category of product are showing benchmark share and growth. research papers and internet. brick -click and click-click formats are also increasingly functional on the Indian retail landscape‟‟.1. Retailing here that is why occupies the major share as it is the flowing and final point of distribution. these becomes core of retailing business. 2.e. retail stores transmit information to customers through advertisements and displays‟‟ Gibson OBJECTIVES 1. the specialist rural marketing and rural development consultancy. of 20million Rediffmail subscriptions.abhinavjournal. VOLUME NO. Retailing in food and grocery shoots up as with growing population it is thing which will get bounced up as it stands first out of all basic needs i.Vedamani. Currently two popular formats hypermarkets and supermarkets are growing at a rapid pace. food . Of two million BSNL mobile connections. 2007 RESEARCH METHODOLOGY The research paper is an attempt of exploratory research. To highlight the retailing as an emerging employment opportunity in rural India.2 19 ISSN 2277-1166 . Tripathi. To focus on the rural market full of untapped opportunities with consumers and unexplored market LITERATURE REVIEW ``Retail stores serve as communication hubs for customers. MART. Both existing and new players are experimenting with new retail formats. 2004 ``Retailing includes all the activities involved in selling goods or services to the final consumers for personal. 60 per cent came from small towns. non business use. A retailer or retail store is any business enterprise whose sale volume comes primarily from retailing‟‟ Philip Kotler. magazines. 50 per cent went to small towns and based on secondary data sources from reference books. Commonly known as the point of sale (POS) or the point of purchase (POP).ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN COMMERCE & MANAGEMENT www. Kevin Keller. so did half the transactions on Rediff's shopping site. Mairead Brady and Malcolm Goodman 2009 ``The Indian retail sector is going through a transformation and this emerging market is witnessing a significant change in its growth and investment pattern. Apart from the brick –mortar formats. shelter and education. ISSUE NO. Aditya P. The word `food‟ is not only a word but something which is filling stomach of world‟s second largest populated country we should thank our rural folks who actually give practical meaning to this word by constantly engaging themselves in agriculture irrespective of what monsoon turns out to be. has found that 53 per cent of FMCG sales and 59 per cent of consumer durable sales lie in the rural areas.

5 Source: Nitin Shrivastava. owner-managed shops. Retail sector will grow after agriculture sector in India. ISSUE NO. The retail industry in India is estimated to employ about 10% of the total labor force.2 20 ISSN 2277-1166 .12 20 19. Coca-Cola. You can still have glimpse of the traditional retails even in cities and in rural India.ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN COMMERCE & MANAGEMENT www. 2008. Impact of retail sector in rural India In India. The retail industry in India is enjoying boom time and job opportunities in retailing have been increasing. Indian Retail employee‟s more than 7% of Nation‟s workforce and stands 2nd after agriculture. hair oil and other like shampoos have done much better in the rural areas than the urban and the semi urban areas. Nestle and Godrej too have also reported better sales in rural areas. while the new retail format is becoming popular in cities as well as in emerging rural India. providing new areas of employment. The retailing sector in India is highly fragmented and predominantly consists of small independent. Indian Retail Sector has the highest outlet density in the world with nearly 12 million outlets. In fact. retailing has emerged as a new stream of management curriculum.1. Perspectives on retailing in India and Rural marketing Food and grocery get its momentum share in retailing as unorganized retailing specifically deals with it consumer durable gets second place followed by apparel and pharmaceuticals with others Some FMCGs products like toothpaste. Retailing is surely an emerging employment option for population living in rural and urban areas. With more entrepreneurs joining in and taking up more self-employment opportunities right from the „panvala‟ to the „nukkad ka chaiwala‟ retailing reaches too far off and covers both organized and unorganized forms but basic aim to maintain that final touch with consumers‟ „The gods of market‟. So you may guess how big Indian retail sector is and its economic importance in India. There are prominent players ready to invest as it becomes lucrative and highly profit driven sector many biggies are making their presence felt there are some noteworthy retail market players.agricultural establishments in rural India during 2005 VOLUME NO. the retail sector is the second largest employer after agriculture. It has been a phenomenon that the sales of many companies have gone up.15 5. Indian Retail sector has evolved slowly and steadily from its basics and still exists in various forms. right from very traditional to modern trends. Following is Distribution of major The retail growth story Product Category Food and Grocery Others Consumers Durable Apparel(RMG) Pharmaceuticals Market size and growth(in US $ billion) 152 83.

Reliance Fresh.ready to purchase consumers with high income and expenditure on the other hand Indian rural markets scattered.01% Source: Economic census all India Report (2005). distances from nearest towns.3% 26% 0. Dilemma for many: It is seen that rural markets are taken as markets more supportive for farm occupation Farming occupations are doing exceptionally well in rural Indian markets though we Cannot deny the relationship of agriculture and rural prospective but today rural Indian Consumers have given U. Different parameters: Indian rural market can be segmented in different parameters such as literacy levels. Haryali Kisan Bazar (DMC). Ministry of statics and programme and implementation Why rural markets are untapped?-3D-effect 1. Naya Yug Baazar. Government of India.abhinavjournal.2% 1% 1% 2% 0. etc. maintenance & Repair of motor vehicle Wholesale trade Other Activities Market share 2% 5% 2% 2% 1% 2% 4% 4% 8% 0. Renting &Business services Financial Intermediation Post & Telecom. etc. This segmentation makes rural market a bit complex in comparison with the urban markets which has some homogeneous features and make it a hub for marketers 2. Transport & Storage Hotels & Restaurants Community. large in size with many consumers with medium income groups leaving marketers less rural market friendly. Distinct challenges with some opportunities When we compare rural markets with urban markets urban markets though smaller in size provide with the entire marketer savvy attitude because of Area Covered Health and social work Education Public Admin. VOLUME NO. Only big players can take a leap of entering into such risky and unpredictable rural market which is why we have retail chains of legendary players trying their hands in rural markets for instance many retail hubs like Kisan Sansar (Tata). 3. market penetration. Defense &Social security Real Estate. Social & personal services Mining and Quarrying Manufacturing Electricity gas & Water supply Construction Sale.2 21 ISSN 2277-1166 .turn to Indian economy. ISSUE NO. income levels.ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN COMMERCE & MANAGEMENT www.1. has been able to make a dent in the village economy. accessibility distribution networks.

in India is going to increase further more in coming years as almost 7% share it has today with more opportunities and open markets it will occupy relevant place in providing employment to a large population in India.7% 18% 11% Source. It emphasizes on reaching to the consumers directly and personally which is why customer satisfaction and good relation with end users make this a lucrative employment generating sector. Nitisha patel. share of retailing in employment.Vedamani. chain shops and supermarkets can employ more people from skilled and trained workforce and unskilled and uneducated workforce for handling customers.abhinavjournal. As retailing can give employment to less educated crowd who are readily available in rural India. ICRIER p publication on pg31 As other countries are showing a huge % share of retail in their employment level.1. 2. VOLUME NO. semi skilled and Share of retail in total employment. Organized retailing though has a huge chunk but as it can engage less number of people its being conventional gives less scope to convert India into a modern set up.2 22 ISSN 2277-1166 . This shows that India like its foreign counterparts is showing a handsome increase organized sector is opening new areas for increase as it has higher scope than unorganized sector as big malls. ISSUE NO. huge and grand structures and markets full of all kinds of consumer mesmerizing goods which make them to loiter at attractive malls with no intention to purchase anything. “Mall‟‟ now gets associated with „culture‟ so in near future we will have more of mall culture than Indian culture followers. Retailing is the emerging career option for many people as it is one of the growing employment options in rural India after agriculture. FINDINGS AND ANALYSIS 1. 3. Rural market is blessed to have consumer flooded market as 3/4th of population reside in rural India that makes marketers to rush towards it though it has shortcomings but it also has unexplored opportunities. Retail stores serve as communication hubs for customers (Gibson G. FDI in retail sector in India Arpita Mukherjee.a comparative study Country India China Poland Brazil USA Korea UK Share in employment 6. Retailing can engage many people as rural India provides with good amount of work force such as skilled.ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN COMMERCE & MANAGEMENT www. Retailing is not only providing employment but gradually converting the dusty lands of India into dazzled. 2004).7% 6% 12% 15% 11.

HLL. Major players are keeping an eagle eye to enter into rural markets as it offers fruitful investments. 2.urban gap will vanish CONCLUSION /08/06/Indian-retail-market-an-overview/.abhinavjournal. 4. Rural markets are highly attached to growth prospects as they have growing numbers of consumers as well as workforce. the task lies in policy formation on the part of government which should include higher foreign investments with more attraction to them as will enhance employment opportunities and speed up the rate of growth of rural India. Indian rural markets are expanding faster than urban ones. Aditya p Tripathi.2 23 ISSN 2277-1166 .21 oct 2011 VOLUME NO.wordpress. Banks should come up with more financial assistance as to encourage blooming of more organized retail markets in India we are not denying the presence of such financial institution but it is not matching with the need for the growth of rural markets 4.Indian retail market –an overview . The places which are full of workers and agricultural produces should be transformed into developed market areas as they can attract retailers to buy from them and these benefits even agriculturists as retailers from urban areas can get it from them at fair prices for e. 2. ISSUE NO. Godrej etc REFERENCES 1. Reliance.http://www. Truly world is going to a global village the best suited example is retailing expanding in rural India with some of the foreign entrants it seems global players are ready to become „dukanwalas‟. Interestingly. This segment is no more an inferior option of investment for big brands like ITC. 3. There should be shift from „urbanization‟ to `ruralisation‟ instead of encouraging conversion of rural India into urban in the name of development it must be seen that rural India becomes self sufficient as far as employment is concerned rural migration is mainly because of employment if any other employment than agriculture shoulders this responsibility then in coming future the word rural.g. If basmati rice of Dehradun is famous the retailers from town should purchase from market which comprise of producers of rice this will restrict exploitation of agriculturists and abolish middleman and will attract big retailers to enter in local markets. Though rural India is growing as a venue for global retailers to join in as they understand the hidden opportunities it has here. RECOMMENDATIONS 1. Anurag.ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN COMMERCE & MANAGEMENT www. rural India accounts for 60 per cent of the total national demand.1.http://anuragjbp.

ac. pp.abhinavjournal. ( 8.blogspot. S&T for Rural India and Inclusive growth.Perspectives on retailing in India and Rural marketing 9.) Peter J.html /k/direct-marketing-in-rural-india# 4. Evolution of 24 ISSN 2277-1166 .htm 12.pdf VOLUME NO. Gary (1995) “Directions for further development and research”.A.nistads. Nonfarm occupation in Rural India. http://retaildirectory. in International 5.htt://business-fact. India.ABHINAV NATIONAL MONTHLY REFEREED JOURNAL OF REASEARCH IN COMMERCE & MANAGEMENT www. Davies. McGoldrick and Gary and Technology:2008.html 7. Gangopadhyay and sarwati Nayak. Retailing: Trends and Strategies. http://nitine. London: Pittman Publishing. 3.blogspot. Nitin shrivastava 2008.html 11.K Mukhopadhyay. 239-242. 6.1. ISSUE http://smib.vuw. Direct marketing: India-Report: Market Segment: Rural india.

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