INDIAN RURAL RETAIL

SCENARIO
⦿ With more than 15 million owner manned mom-and-pop
stores, India is often called a nation of shopkeepers.

⦿ This is referred to as unorganized retailing and it refers to

the traditional formats of low-cost retailing such as the local
corner shops, owner manned general stores, paan/beedi
shops, convenience stores, hand carts and pavement
vendors, etc.
⦿ On the other hand, organized retailing refers to trading
activities undertaken by licensed retailers who are registered
for sales tax, income tax, etc. These include the publicly
traded supermarkets, corporate-backed hypermarkets and
retail chains, and also the privately owned large retail
businesses.
Distribution and Logistics Models

⦿ The typical distribution models and hub and spoke model

do not always succeed in the rural markets and are very
expensive to implement. 
⦿ Taking the example of HUL, taking its huge product
portfolio to the remotest of villages was a big challenge.
⦿ However, the company realized that the conventional hub-
and-spoke distribution model which it used to great effect
in both urban and semi-urban markets would turn out to be
very expensive when penetrating the smaller scattered
villages.
⦿ Hence, it came up with Project Shakti and created local
entrepreneurs using self-help groups. This developmental
approach made sure that even the remotest of villages
could be reached and the market developed without a large
investment in the distribution infrastructure.
 ENSURING SUSTAINABILITY THROUGH MARKET
DEVELOPMENT

⦿In order to generate sales in the remote rural

markets, they must be first developed so that
the consumers have the required knowledge to
find value from the product and the disposable
income to be able to afford the product. 
⦿ In order to sustain, the organized retailers
must simultaneously work to develop these
markets by implementing innovative ideas.
⦿Looking at ITC, it did not straight away
establish the Choupal Sagar stores, instead ITC
focused on developing linkages through its e-
Choupal program first.
⦿It developed a strong network to buy
agricultural products from farmers and improve
productivity, helping raise their incomes and in
the process, reduce its procurement costs.

⦿It was after establishing the e-Choupals and a

certain level of trust with the rural markets that
ITC went on to launch the Choupal Sagar stores
which sold a variety of products and services to
these rural markets.  
 Understanding
Rural Market &
Consumers

Setting up Cost- Success of

efficient Distribution
& Supply Chain
Retailers in Rural
System Market

Delivery of
Optimal Value &
Satisfaction to
Rural Consumers
RURAL RETAILING INNOVATIONS
⦿India is a country of villages and more than
80% of the population lives in villages.
Marketing innovation is all about introducing
the main changes in designing the product
or packing, product placement, product
promoting or pricing etc.

⦿But, rural retailing can leverage that

marketing mix based on the requirements of
rural people and which is
suitable for those people.
⦿Rural retailing can be successful depends on
the planning and implementation of marketing
in rural areas. Before planning the pulse of the
rural people is to be properly identified and
accordingly the marketing functions are to be
planned. Indian rural market is vast and
scattered in nature, offers wide opportunities to
the marketers than the urban markets. In the
Indian context, the innovations in rural retail
marketing consist of 4A’s :
i . Awareness
ii. Acceptability
iii. Affordability and
iv. Availability.
SWOT ANALYSIS OF RURAL RETAIL MARKET
⦿STRENGTHS

⦿About 70% of India's population lives in

627000 villages in rural.
⦿Middle and higher income households in rural
India are expected to grow from 80 million to
111 million in coming decades.
⦿ In urban India, the same is expected to
grow from 46 million to 59 million. Thus the
absolute size of rural India is expected to be
double to that of urban India.
⦿Young population.
⦿WEAKNESS

⦿ Low literacy rates

⦿Low standard of living
⦿Traditional outlook
⦿Lack of popular brands
⦿ Seasonal demand
⦿Limited Distribution network for example
cold storage
⦿Gaps in road and Telecommunications
connectivity
⦿ Lack of reliable electricity and water supply
⦿OPPORTUNITIES

⦿3 times more families lives in Rural India.

⦿ Rural India has a large consuming class with
41 per cent of India's middle-class and 58 per
cent of the total disposable income.
⦿ Population-becoming brand conscious.
⦿ Exposure and increase in literacy rates will
open market further.
⦿THREATS

⦿Shifting of young generation-rural to urban

cities.
⦿Entry of small time players – Study on buying
behavior of rural consumer indicates that the
rural retailers influences 35% of purchase
occasions.
⦿ Vast majorities-rural people-tradition bound,
fatalistic and believes in old customs,
traditions, habits, taboos and practices.
⦿ Competition from local players.
Conclusion

⦿Integration of rural initiatives into business

model like ITC.
⦿ Corporate should supplement government
efforts & resources (infrastructure
development, education system, storage).
⦿Creating retail stores which should be rural in
nature so that the rural masses identify
themselves with these stores.
⦿ Innovative & Exciting Initiatives such as Village
BPO should be given impetus to tap the talent in
the rural India.
⦿Empowerment in terms of economic power,
purchasing power, knowledge and information
dissemination is crucial for rural retail ventures
to succeed.
⦿ The model should empower the rural consumer
and at the same time take advantage of this
empowerment through creation of demand for
its own products and that of its partners.
⦿However, so far as the rural share in consumer
expendables like cooking oil, tea, electric
bulbs, hair oil, shampoo, toilet soap,
toothpaste, washing cakes and washing powder
is concerned, their share on an average, is much
higher than consumer durables.