RURAL RETAILING

RETAILING
• Retailing is the sale of goods and services from the small
vendors to individuals for end use or from small vendors
to street hawkers and peddlers for resale to the interior
part of the villages and rural areas.

• The retailer has to forecast the needs and desires of

prospective customers. He has to supply the required
products and services at reasonable prices.

• He has to facilitate convenience and ease of shopping to

the prospective customers. In addition to this, proper
instruction about the product, free demonstration after
purchase and etc. should also be given to enjoy extended
patronage from the customers.
FORMS OF RETAILING
RETAIL IN RURAL INDIA
• Rural India is set to witness an economic boom, with per
capita income having grown by 50% over the last 10
years, mainly on account of rising commodity prices and
improved productivity.
• Development of basic infrastructure, generation of
employment guarantee schemes, better information
services and access to funding are also bringing
prosperity to rural households.
• "Overall there is a huge market which is waiting to be
served, ready to splurge, willing to explore new products
and services, and retailers can tap on their wallets," said
Ramesh Srinivas, national industry director (consumer
markets), KPMG India. In rural markets, consumers are
practical and price sensitive.
• In order to earn brand loyalty in the rural market,
product design will need to go beyond ideas like
smaller sizes (such as single use sachets) to create
genuinely new products that appeal to this segment.
Also, with most of the retail markets in cities getting
saturated, rural markets offer a sea of opportunity
for retailers.

• Retailers have devised different models to serve rural

markets. For instance, ITC promoted `choupal sagar'
has a huband-spoke model involving farmers. The
model offers a rural shopping mall where they can
sell their commodities and can buy almost anything
including garments, cosmetics, electronics and even
tractors.
• Other examples include Pantaloon Godrej's joint
venture (Aadhar), Reliance Retail (Fresh & Fresh
Plus), Hindustan Unilever (Shakti), DCM
(Hariyali Kisaan Bazaar) and Mahindra &
Mahindra (Shublabh). In the villages and small
towns, it has been a very different picture.
• "The rural market is insulated from the global
meltdown," says Harish Bijoor, CEO of brand
and business strategy consultants Harish Bijoor
Consults. "The rural part of our economy has
been untouched by credit cards and mortgages
as known in the West."
Features of Indian Rural Markets
• Large, Diverse and Scattered Market: Rural market in India is large, and
scattered into a number of regions. There may be less number of shops
available to market product.

• Major Income of Rural consumers is from Agriculture: Rural Prosperity is tied

with agriculture prosperity. In the event of a crop failure, the income of the
rural masses is directly affected.

• Standard of Living and rising disposable income of the rural customers: It is

known that majority of the rural population lives below poverty line and has
low literacy rate, low per capital income, societal backwardness, low savings,
etc. But the new tax structure, good monsoon, government regulation on
pricing has created disposable incomes. Today the rural customer spends
money to get value and is aware of the happening around him.

• Traditional Outlook: Villages develop slowly and have a traditional outlook.

Change is a continuous process but most rural people accept change
gradually. This is gradually changing due to literacy especially in the youth
who have begun to change the outlook in the villages.
• Rising literacy levels: It is documented that approximately 45% of rural
Indians are literate. Hence awareness has increases and the farmers are
well-informed about the world around them. They are also educating
themselves on the new technology around them and aspiring for a better
lifestyle.

• Diverse Socioeconomic background: Due to dispersion of geographical

areas and uneven land fertility, rural people have disparate socioeconomic
background, which ultimately affects the rural market.

• Infrastructure Facilities: The infrastructure facilities like cemented roads,

warehouses, communication system, and financial facilities are inadequate
in rural areas. Hence physical distribution is a challenge to marketers who
have found innovative ways to market their products. As part of planned
economic development, the government is making continuous efforts
towards rural development. In this age of liberalization, Privatization and
globalization, rural market offers a big attraction to the marketers to
explore markets that are untapped.
Rural Retailing – Prospects and Challenges
• Automobile- Rural India accounts 35% of automobile industry sales,
led by demand for two-wheelers, entrylevel cars and tractors.

• FMCG (fast moving consumer goods)- Rural consumers spend

around 13 percent of their income, the second highest after food on
fast moving consumer goods (FMCG), as per a RMAI study.

• Telecommunication- A joint Confederation of Indian Industries and

Ernst & Young report reveals that of the next 250 million wireless
users, approximately 100 million (40 %) of it belongs to rural areas,
and by 2012, rural users will account for over 60 total telecom
benefactor base in India. In a bid to acquire rural benefactor, most
Indian telecom operators have been started investing in
infrastructure to roll out their services in these areas. Rural
marketing communication is going to appear in a big way as the of
smart phones are expected to grow two fold.
• Internet & e-Commerce- In a step to increase Internet
introduction in rural India, the Government of India
(GoI) will create more 250,000 nodes for broadband by
2016 that will serve more than 6.0 lakh villages.

• Consumer Durables- India will be the fifth largest

consumer durable market in the world by 2025. Both
Urban and rural markets are equally contributing in its
growth with rural market having a upper hand in it.

• Food and Grocery- With changing lifestyle due to

exposure and awareness in rural markets the food and
grocery market will grow two fold by 2020.
• It opens a door for developing new markets to reach
the ultimate customers.

• It increases the disposable income of the consumers

by offering convenient shopping locations and
giving free delivery of goods and at their doorstep.

• It helps in increasing the per capita income of the

consumers in such a way by creating multiple job
opportunities.

• It tends to offer services and reach the large mass of

the population with the help of recent
advancements in marketing strategies.
• It increases the purchasing capacity of the
consumers also. Because the retail rural
marketing offers manifold job opportunities to
the individuals and in turn increases the per
capita income and disposable income.

• It assures market growth of the organisation in

such a way by opening doors to manifold
strategies of marketing to reach all the markets
without any restriction in terms of manpower,
information, locality and etc.
CHALLENGES
• Some major challenges for rural markets are widely
dispersed i.e. large number of small market, dispersed
population and poor road connectivity, low density of
shops per village, inadequate banks and credit facility,
poor storage facility, low investment capacity of retailer,
poor communication of buyers, higher bargaining, poor
visibility and display of products on rural shop and leads
to fear for investor.
• For, overcoming all these things government has to
implement the infrastructure in villages.
• It creates a large number of small markets, which in turn
difficult for the organisation to concentrate and monitor.
There are chances for the poor display of products on the
rural shops.
• There is a need for a large number of human resources to
concentrate on the multiple numbers of markets created
and in developing various kinds of strategies.

• Poor road connectivity restricts the Rural Retail

Marketing to reach the rural area to offer their services
effectively.

• There are chances for non-availability of dealers to

concentrate on the individual markets which may affect
the market share of the organization.
• Inadequate credit facilities also another hindrance faced
by rural retail marketing, because of the risks involved in
it. This affects the investment capacity of retailers.

• In order to concentrate on the varied number of

customers and markets, the business entity should store
a lot of quantity of goods and maintain the storage
system in such a way to offer effective and efficient
distribution of goods. It is a time and cost consuming
process.