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Organized Retail in India

Opportunities & Challenges

10% as compared to 8% in China. • Modern retailing is capable of generating employment opportunities for 2. 6% in Brazil. • The total size of industry stands at $475 Billion and is expected to touch $650 Billion by 2015-16. .Current Scenario • Today retailing is largest contributing sector to country's GDP i.e. • Organised retail which presently account for only 46% of the total market is likely to increase its share to over 30% by 2013.5 million people by 2010 in various retail operations and over 10 million additional workforces in retail support activities.

like dual household income has enhanced spending power. • Opportunities SWOT Analysis • • Threats Rising rental costs affecting project viability Poor monsoons and low GDP Growth could affect consumer spending • Archaic labour laws are a hindrance to providing 24/7 shopping experience. • Retail revolution restricted to 250 million people due to monolithic urban-rural divide. • • Strengths Weaknesses Shortage of quality retail spaces at affordable rates. • Government regulations on development of real estate(Urban Land Ceiling Act) • Need to provide Value for Moneysqueezing margins • Lack of industry status. • Average grocery spends at 42% of monthly • spends-presents a huge opportunity. • Lack of huge investments for expansion • Increasing urban population-more participants in retail revolution. • Paradigm shift in shopping experience for consumers pulling in more people. retail space available. • Increase in use of credit cards. ft. • Social factors. • Increase in consuming middle class population. • Differentiate taxation laws hindering expansion . • Pattern of consumption changing along with shopping trends. • Spends moving towards lifestyle products and esteem enhancing products. • Consumer spending increasing at 11% annually. • Almost 25 million sq.Organized retailing is growing at 8% 2nd largest contributor to GDP after agriculture at 20%. • Personalized service offered by Kirana stores • Unavailability of qualified personnel to support exponential growth in retail.

Limits organized retail business of 24*7 Higher operational costs Rate.Challenges Fragmented Supply Chain Multiple Legislative Laws Cumbersome Labour Laws Escalating real estate prices Complexity in tax structure Implications High wastage and high product cost Hinder fast expansion and increase overall cost. classification and procedure is different across the country Beginning of specialized training centre and specialized course on retail Shortage of Manpower Cultural Disparity Industry status Understanding customer choice and preferences is different Far away from benefits of Industry status .

Major Infrastructural problems in Organized Retail Industry in India 21% 14% 30% 7% 7% 21% Parking Public Transport Squatting Sewerage Power Supply Low Govt. investment .

Rising Real estate Price. Music. Footware. Pantaloon One stops shopping model (Over 2. leather products. Personal care products. toys. Vishal Megamart Small format models which later on converted into hypermarket model. Consumer durables. 50. Home Furnishing. home furnishing . Disintegrates intermediary and reduce cost of fresh produce. watches. Big Brand. kids and accessories Managing the expansion plans with supervising demands of consumers and keeping economic of scale high. Toys. Jewellery. grocery. luggage. staples. Apparel for men. Unavailability of Land. Challenges Faced Faced in balancing in mad expansion plan and in deciding demand prone product mix. Focusing on lower middle income group Globus Departmental Store Amazing Price suited to every YOUTH. It will take time to position the brand in the mind of customer Coupon Mall One stop model targeting Tier II and III cities. home furnishing.) Maximising on Gross margin Reliance Fresh Farms to forks model is adopted to operate business. FMCG and Dairy products House Hold merchandise. pharmacy and mobile phone Branded and Private label apparel. Price suit to every targeted customer Political Interface and people movements against the retail giant at various places Managing the expansion plans with supervising demands of consumers and keeping economic of scale high. women.000 SKUs. MRP Laws.Major Players Subhiksha (Non-operational) Business Model High Volume and Low Margin Model Pricing Strategy Low Price and Low Margin Product Mix Fresh Fruit and Vegetables. Food and Grocery Fresh fruit and vegetables. big discount Apparel. toileteris items. groceries. Books. mobile phones.

. • Mergers of weak retailers and buy out weak retailers by a stronger one are other important steps. • Networking of Independent firms believing the use of technology for business excellence and pressurizing suppliers and others channel members to use compatible technology. This will give new retailers the desired leverages to be world class.Recommendations • There is a need for setting up of Retailers Co-operatives which function as distribution centres and warehouses. It will help the retailers to buy the products they want directly from original manufacturers in bulk quantity.

contract farming. Government should introduce a uniform taxation system across the country to relax the law that hinder inter state flows of goods. movement of goods across India and also defines clear cut guidelines for the functioning of retail sector in India.Suggestions • • • • Accord Industry Status to Retail : Industry status should be given to improve retail development. to facilitate organised financing and to establish insurance norms. Essential Commodities Act. Incentives for Investments : Tax holidays norms for cold storage chains. Comprehensive Legislation : Comprehensive legislation should be drafted and enacted with futuristic approach. infrastructure and investments in supply chain should be enacted. Establishment of National Commission on Retail: The national commission on retail must be established. This will help in creating "Commodities Futures Markets". • • • • • • • • • • . Rationalise the tax structure : The current multipoint taxation should be rationalised. APMC Acts. stamp duties. Streamline the process of clearance Encourage PPP model for infrastructural development Reduce impediments to inter state movement of goods Enforce uniform quality standards Setup a regulatory body for the governing the operations of retail sector. Licensing restriction. should be simplified and put in proper place so that it would not hinder growth of retail sector. Eliminating Archaic Laws : Laws. Allow Foreign Direct Investment (FDI) in phased manner : Allow foreign direct investment in the company according to financial planning. Amend the existing cumbersome labour laws: The existing labour laws needs to be amended on an urgent basis in order to support the growth the growth of organised retailing and to develop India as a sourcing hub. differential taxes. Announce a national policy for retail: The Government should announce a National Retail Policy that allows the coexistence of both organised and unorganised retail and address issues such as sourcing.

. 65-80. 2 (3). 2012. VSRD International Journal of Business Management Research. “Organized Retailing in India : Challenges and Opportunities”.References • Sanjay Manocha and Anoop Pandey. Vol.