The mom-’n’-pop stores fear they will be wiped out by FDI, and want the big companies, Indian or foreign, to be kept out. The multinationals want less of red tape. The existing big retailers want the option to divest. You can pick a solution that fits your requirements from our supermarket of ideas and we will assist you in hard-selling it to the policy makers so that the final rules benefit all market participants.
The $500 billion Indian retail industry is among top five in the world. Its share of GDP stands at about 15 percent. Some estimates see the market touching $850 billion by 2015. The increase in double income nuclear families as well as a younger working population is set to boost the sector. Consumers expect more value for money and prefer personalised experience as the competition heats up with the sector being opened to foreign retailers. Studies have estimated that the organised sector will grow at 24 per cent or thrice the rate of traditional retail. Adapting to local tastes holds the key to success in a market as huge and differentiated as India. The geographical and cultural variations means there cannot be a one-size- fit-all strategy. The Indian consumer is extremely price sensitive. Most are as willing to trade down as trade up if they feel the product is not delivering value for money. Many retailers have started offering in-house branded products which are cheaper than those of other companies. Indian business houses which had forayed into retailing are still trying to find the right business model and store size among other things.
The Indian retail industry provides a source of livelihood to nearly 5 crore people, most of them in the unorganised sector. Food and grocery retailing accounts for around 60 per cent of the market, with apparel and mobile sector at number 2. The unorganised sector accounts for more than 90 percent of the retail sector. India tops the global charts in terms of number of outlets per person at 7 per thousand and retail density of 6 percent but the lowest space per capita of 2 sq feet per person. Organised retailers, Indian and foreign, are facing political opposition in many states as the small retailers fear extinction. Small retailers currently enjoy the benefit of cheap labour and personal relationship with the consumers, which allow them to offer home delivery and sale on credit. These are set to vanish over time. They are already losing customers in areas with supermarkets which offer discounts and loyalty benefits. The Indian government is treading with caution especially in case of multi-brand retailing. The state governments have been given the final say in this matter. The rules and regulations governing this sector are being carved with extreme care, keeping in mind the political and social sensitivities of all market participants.
New avenues bring new challenges. Online retailers with low overheads already provide products at lower prices and more convenience. This is proving to be a big problem for retail shops. The online sellers and buyers have had some bad experiences but those are more of exceptions than the rule. According to a study, online retailing in India is likely to touch $ 76 billion by 2021, and account for more than 5 per cent of the industry. Brand conscious consumers in smaller cities are among the leading online shoppers.
(Disclaimer: The information has been aggregated through secondary research. IFIE is not responsible for errors if any)