Assignment 2

Retail Landscape in India

India is one of the fastest growing economies in the world. The retail business is separated into
organized and un-organized sectors. Organized retailing alludes to exchanging exercises
attempted by authorized retailers, that is to say, the individuals who are enrolled for deals
charge, annual duty, etc. These incorporate the corporate-supported hypermarkets and
corporate store, and furthermore the exclusive huge retail organizations. Whereas in un-
organized sectors then again, alludes to the conventional organizations of minimal expense
retailing, for instance, the nearby proprietor manages convenience stores, convenience stores,
wheel barrow and asphalt sellers.
It is essential to see how retailing functions in our economy, and which job it plays in the
existences of its residents, from a social as well as a financial viewpoint. Only 5 to 7% of the
total retail is organized retail.

India is ranked 73rd in UN Conference on Trade and Development’s B2C E-Commerce Index
2019. With regards to Retail sector India is the 5th largest Global destination with most dynamic
and fast paced industry due to a greater number of new players entering the market. With
respect to the impact in the economy produced by this sector, according to Kearney Research,
this sector is projected to grow at rate of 9% over 10 years from 2019 to 2030. As of 2019 the
valuation or the size of this sector is US$ 779 billion and by 2030 it’ll become more than US$
1.8 trillion Industry. The revenue generated in offline retails, which is known as B&M retailers is
said to increase by US$ 1.7 to 2.7 billion by the end of FY2022.

Even though having an unfortunate event of COVID pandemic during January - March 2020
decline of 19% the FMCG recorded a growth of 1.6% Y-O-Y in 3rd Quarter of 2020. As FMCG
increased, it gave us the reflection of positivity in the overall macro-economic scenario, this
happened because of the ease of government lockdown restriction. According to RAI (Retail
Association of India), it has achieved 96% of pre-COVID sales as of Sept 2021, there has been
an increase in consumer durables by 15% and quick service restaurants by 18%. India is at 3 rd
rank in E-Retail just behind China and the US. Even with the pandemic onslaught Amazon,
Flipkart and the other vertical players sold goods which was worth US$ 9 billion during 2020
festive season. The E-Retail had been a boon for everyone during the pandemic as it was
cooperating with the government restrictions. According to Bain & Company the e-market is
expected to grow at a rate of 25 to 30% p.a. over a 5-year period, which is US$ 120 to 140
billion by 2026. According to the data released by Ministry of Statistics & Programme
Implementation, Consumer Price Index based retail inflation increased to 6.3% in may 2021,
however the retail inflation decreased to 5.3% in Aug2021.

Nonetheless, it is demonstrated that the customary kirana stores and outlets in India are super
productive and have had the option to contend effectively with present day retail for an
extremely extensive stretch of time. Current exchange has extended drastically, yet the old
style, customary kirana and accommodation outlets have developed, modernized and become
self-administration outlets to do surprisingly well.

In the month of July 2021. The Andhra Pradesh Govt announced the retail park policy 2021 –
2026 with the anticipation target of Rs 5,000 crores for next 5 years. And one of the subsidiaries
of DPGC, DP retail has entered the market and plan to invest Rs 1,000 crores by 2021 to
expand it to other cities from Mumbai. Reliance and Realme has announced a plan to launch 7-
Eleven Inc. convenience stores and 100 new exclusive stores across India respectively to
strengthen their foot prints.

In October 2021, the RBI had announced a new framework for Retail digital payment in offline
mode to promote and accelerate the digital payment adoption.

As of December 2021, our policy supports about 51% FDI in multi brand retails across India.
Now the cumulative FDI inflows stands at US$ 3.61 billion between 2000 and June 2021 and
the retail sector in India attracts nearly US$ 6.5 billion from various private equity and other
venture capital funds in 2020. With the innovation in financing, banks have been partnered with
the retailers are supporting consumers to buy durable products with easy credit which intend
increased the purchasing power which directly led to growing of demand.

The major factors responsible for the enormous growth in retail is because of recent
development in organized retailing. As it is the result of Socioeconomic factors.

1. Increase of middle-class consumers, with the increasing demand of disposable income.

As they want quality products at an affordable price (decent price) and the retailers has
also offering a wide range of products and a better value-added service.
2. Emerging of Rural markets as everyone is becoming quality conscious, which intend
makes the competition stiff.
3. Entry of Corporate sectors like TATA, Reliance, the Piramals, Shopper’s Stop etc. Even
though they have been already there in the market, right now they are expanding it
rapidly and revolutionizing it.
4. Impact by Technology and innovation, with the help of internet retailers can sell their
products from anywhere in the world. The biggest innovation which is the introduction of
Barcode, which changed the entire retail sector to another level.
5. Growth in Income, which was led by increase in literacy rate among the population. This
rise is not only in the Cities but also in towns and remote areas. So, the increase in
Education level has an impact in evolution of new retail structure.
6. Entry of Foreign Retailers, which was a result due to liberalization of multinational have
now a joint ventures and franchising with the domestic retailers.
7. Value for money, as the sector deals in large volumes with large scale production and
distribution. Which eliminates the intermediaries for example Big Bazaar, etc.
8. Media, now there are more satellite television and internet boom. Which leads the Indian
consumers exposed to the lifestyle of other countries. Where the expectation for quality
has increased.

When it comes to key distribution channels, Logistics and Warehousing plays a major role as
everyone is opting for lightning speed delivery. Having demand without the product in
warehouse or very less means to deliver it to them, leads to serious loss of customers. Shared
logistics space or a centralized space warehouse can help develop smaller retailers by reducing
their warehouse expenses. Shared warehousing example: Nestle and PepsiCo shares a
warehouse in Belgium and Luxembourg. Delivering the products has a wide range of options
from personal door deliver, courier, autonomous vehicle till drone-based delivery as Amazon
currently experimenting it in US. The sellers have to reduce the lead time between capturing
and delivering the orders.
Challenges faced by Retail sector are

1. Lack of technology adoption.

2. Lack of Infrastructure and logistics.
3. Insufficient supply chain management.
4. Pricing issues compared to other retail organizations.
5. Scarcity of skilled workforce.
6. Understanding of customers.
7. Increasing of customer demand.
8. Cost of operations is high.
9. Cultural diversity.

For the Future outlook, as the technology is increasing rapidly day by day
1. The retailers have to use data analytics for micro segmentation which can provide the
sellers to personalized offerings to their existing and potential consumer with the
targeted communication.
2. Offering additional and extra services and facilities by making it convenient for the
buyers like virtual reality shopping, chatbots, gamification.
3. Sift to Block chain-based loyalty programs by using mobile based application programs
from traditional loyalty programs Example Starbucks. Offering dynamic pricing strategies
and customized deals for customers.

Source: www.ibef.org, www.google.com, www.indianchamber.org, PWC, Deloitte, Journals.