Retailing in India
Retail is the new buzzword in India. Buying ritual has become shopping experience. It is a celebration and entertainment. Lifestyle is changing rapidly. The concept of value for money is gaining importance. The information that the Indian consumer has access to is immense which leads to the freedom of choice and in turn the demand for the differently organized retail formats. The traditional way of retailing is also organized but differently organized. The changing income profiles, change in consumption patterns, changing demographics, diminishing difference between rural and urban India demand the change in the way the retail business is carried out in India. This paper discusses the traditional retail formats in India, drivers of retail change in India and the strategies required to cope with the colossal challenge of getting accepted by Indian consumer or rather Indians.
Traditional Retail Formats in India
Barter is considered as the oldest form of retail trade. Since independence, given its size and complexity, retail in India has evolved to support the needs of the country, Various forms of retail that have been a part of Indian landscape are Haats, Mandis, Melas, Public distribution system, the Khadi & Village Industries Commission stores, Canteen Stores Department and the most important if them the Post Offices.
Haats
Haats are periodic markets that form a major part of the rural market system in India. This is a location which witnesses a public gathering of buyers and sellers at fixed times and fixed locations. Some interesting facts about the Haats are:
Average sale per day: Rs. 2.25 lakhs
Number of sales outlet per Haat: 300+
Number of visitors per Haats: 4500+
Average sale per outlet: Rs. 900
Villages covered by a Haat: 20 to 50
Melas
Melas are fairs, and they can range from commodity fair to religious fairs. Virtually every state in India has Melas for which it is known, it is estimated that more than 25,000 Melas are held every year in the country. It is also estimated that the average outlet in every Mela would be more than 800 and the average sale per Mela would be Rs. 143 lakhs.
Mandis
Mandis are markets set up by the state government for the sale of agriculture produce directly from the farmers. Close to 6,800 Mandis exists in India and are believed to cater a population of 1.36 lakhs.
Public Distribution System (PDS)
This format is also popularly known as Ration Shops or now increasingly called as fair price shops. The PDS would easily emerge as the single largest retail chains existing in India. The origin of this format can be traced in the ‘rationing’ system introduced by the British during World War II. This started in 1939 in Mumbai and subsequently extended to other cities and towns and finally to the villages. It started with the food grains as SKU’s and later essential commodities like sugar, cooking coal and kerosene oil were added to commodity basket of PDS. PDS has now changed from typical rationing system to a system which makes food grains available at a fare prices. The numbers of PDS or Ration shops in India are 463,000.
Canteen Store Departments (CDS)
It is one of the well established and highly appreciated for the quality of the products being sold. The customer base of this is particularly the defense personnel. This retail chain amounts to total of 3400 shops all over India.
Khadi and Village Industries Commission Stores (KVIC)
The Khadi and Village Industries Commission was set up post independence. Today there are more than 7000 stores run by KVIC.
Post offices
It is the largest and the oldest network of retail outlets in India with over 463,000 post offices in India reaching almost all 650,000 villages in India. The product portfolio includes mail services, financial services and premium services like passport etc. the significance of the this form of retail is the credibility of the post offices in India is probably the highest amongst any services.
Established Formats in India.
Along with the traditional formats the various other retail formats that exist in India as mentioned below
The most important of them all is the Kirana Stores or Mom n Pop stores in nearby residential areas. The market share of these format combined together is almost 95% of the total retail trade in India. Over 11 million outlets employ over 4 cores people. 96 % of these stores are less than 500 sq. ft.. Amongst the other established formats are departmental stores, multibrand showrooms, cooperative stores and the Pan/ Beedi shops are amongst the established formats.
Emerging Formats
These formats include Exclusive retail outlets, Hypermarkets, Mall and Specialty stores, Multiplexes, Rural oriented formats, Fast food outlets etc. These formats are already made a significant presence in Urban India and from tier I cities now moving towards the tier II and tier III cities. Understanding the working of these differently organized formats which have basically come from the west is very important as according to most of the conservative economist feel that these can pose threat to the traditional and established formats. Presently this form only about 5% of the total retail sales but the estimates of growing to 15 % by 2015.
