The Retail Industry Continued in India in the Form of Kiranas Till 1980

8/12/2019 The Retail Industry Continued in India in the Form of Kiranas Till 1980

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The retail industry continued in India in the form of Kiranas till 1980. Soon,

following the modernisation of the retail sector in India, many companies started

pouring in the retail industry in India like Bombay Dyeing, Grasim etc. As has been

mentioned earlier the retail sector in India can be widely split into the organised and

the unorganized sector. The unorganized sector is predominant. We may discuss in

detail the different divisions of the retail sector in India.

Retail Investment Opportunities in IndiaIndia has witnessed a fast paced growth in the retail sector in the last 15 years, and thousands of jobopportunities were created. According to the 2012, GRDI report (Global Report Development

Index)Indiaranked 5thamong the top thirty countries in retail marketing sector.

Food Retail India

Indian Government has recently announced 100% Foreign Direct Investment (FDI) in cash & carry formats or

51% FDI in single-brand, which has created optimistic reactions from top retail sector investors from across the

world.

Indiasretail structureBeing among the top populated nations, Indian retail market draws a mammoth $450 billion, both as organised

and non-organised sectors. The organised retail fraction currently amounts to 10 % total market, but is

predicted to rise to 20%

Overview of Indian retail segment2012 Food and grocery60%


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Apparel11%

Consumer electronics8%

Mobile and telecom6%

Food service5%

Jewellery4%

Pharmacy3%

Others3%

Overview of Channels or formats

Indian retail sector is diversified into various setups based on factors like the outlet size, pricing strategy, kind

of commodities sold, and location.

1. Channels and outlets or organized retail has improved. Hypermarkets (40,000 to 200,000 sq. feet),

supermarkets (10,000 to 30,000 sq. feet), convenience stores (500 to 3,000 sq. feet) are major retail formats.

2. Cash & carry outlet is not completely a retail format, but the consumers or small retailers purchase products in

bulk. The size of such stores range from 100,000 to 300,000 Sq. Feet. Wal-Mart in coalition with Bharti is the

major player of this format.

3. Discount stores (Big bazaar, Subhiksha), speciality stores (Vijay sales), departmental stores (Globus, west-

side) and category killers (Ezone, Staples).

Laws and RegulationsThere are certain laws that retailers have to follow, which are related to establishing stores and conducting

everyday activities.

General laws are: Shop & Establishment Act Income Tax Act

Standards of Weights & Measures Act

Contract labour Act

The Companies Act

Customs Act

In addition to the above acts, retailers have to follow some regional rules & regulation on the store location.


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FDI Setup in IndiaMany foreign brands have entered into India after the 1991 Government policy, which had appealed to the

foreign participants in the retail sectors. The cash & carry business was the easiest mode for foreign retailers to

gain foothold into the promising Indian market. Carrefour launched their first cash & carry store in Indias capital

city, New Delhi. Last year, due to global economic slowdown, investments had dropped in almost all sectors.

For this reason, Government has changed the foreign investment guidelines to elevate investments in this

current year. Organized retailing is on the rise at a forceful rate with the increase in the numbers of shopping

malls and organized retail formats.

Clothing Retail India

Key Factors That Have Given Rise To Organized Retail In India Are:1. Increase in disposal incomes of middle-classIndian middle-class families are seen as pursuers and

strugglers. It is this consuming class that is the prime target section for retailers.

In 2005, about 6.4% middle class accounted for 20% disposal income.

By 2015, there will be 25% increase in middle class contributing for 44% total disposal income. By 2025, these predicted respective figures might even elevate up to 46% -57%.

Indian middle class population along with their developing level of disposal income will increase the prospective

development of organized retail sector in India.

2. Revolution in consumer trends and stylesThe main reason for the paradigm shift in shopping behaviour

of Indian consumer is acceptance of trends and styles. The advanced technological changes have made

Indians aware of changes in lifestyle. Today, they shop for brands as per needs and occasions.

Consumers are attracted into organized retail stores, because they offer various brands and selections. The

change in lifestyle has given a massive boost to the retail sectors like telecom, beauty, healthcare, and

entertainment. Additionally, media coverage has increased consumer awareness regarding products, prices,

and uses.

3. Changing demographicsIndia is the youngest and largest consumer market of the world with median age

around 25 years. It is lowest in comparison to other countries. As per the forecast calculation, Indias median

age will be 28 years in 2020. More than 53% Indian population is expected to be of age below 30 by 2020.


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This clearly indicates that the potentials of enormous Indian retail sector. The population is regarded to be more

vibrant than former generations, because their expenditure is driven by wants instead of needs. The retail

products related to lifestyle are expected to get a huge boost by the young population.

4. Increase in working people - Being the 2ndlargest in population rate, India is undoubtedly a huge consumer

market. In 2008, working population in India within age group 15 to 49 years was 53% in comparison to 48.6%

in UK, 53% in Russia and 49% in US. Furthermore, in the last decade, there has been 20% rise in working

women.

5. Increase in urbanisationCurrently, more than 335 million Indians dwell in towns and cities amounting to

30% of total population. Speedy migration to metros and cities for high income opportunities have allowed for

development of retail sales in the country. Moreover, the rapid infrastructure development has attracted many

rural inhabitants to the cities.

6. Internet brought awareness and online shopping facilityInternet users in India are increasing. Internet is

not only used for getting information and entertainment, but is also used extensively for shopping as well.

Consumers are able to order products comfortably from their homes, and have them delivered at their

doorsteps.

7. Easy credit availabilityCredit cards have also led to the elevation of organized retail segment in India.

Actually, it has fuelled the purchasing powers of young Indians.

8. Foreign retail investment expansion plansForeign investors like Wal-Mart plan to establish more retail

outlets in 1218 months. Technopak estimates that organised retail will tap US $35 billion in coming 5 years.

Consolidation benefits:

Indian economy is predicted to add extra trillion dollars to its Gross Domestic Product (GDP) in next 5 to 6

years, allowing Compound Annual Growth Rate (CAGR) of 12%. In this early development phase, Indian retail

is expected to rejuvenate and distinguish itself fully. Main Gains:

1. Consumer sentiments are improving with financial conditions, employment opportunities, regular incomes, pricerises, quality of life, personal financial health, and stock performance.

2. Same store sales concept has bounced back.

3. New store expansions have accelerated sales growth.

4. Government totally backs organized retail, because it can enhance farm practices and ensure better price,

which can be a win-win for both farmers and consumers. Therefore, Government has articulated APMC Act

(2003), where farmers and private players can openly trade their product.

5. Organized retail can benefit up to 0.5% sales tax on the application of GST (Goods & Service Tax) of running

business in India.

6. In coming 20 years, along with change in spending power, India will observe rapid development in its

middleclassThe households with Rs.200000 disposable incomes annually will raise to Rs.1000000.

India has emerged the fifth largest consumer market. Development will draw millions of people above the

poverty line, and into the world of middle-class. Rising incomes will give every Indian an opportunity to enjoy

comfort and pleasures enjoyed by middle-class families world-wide. Moreover, increasing domestic

consumption will generate more financial and employment developments as businesses work diligently to fulfil


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new consumer demands. For retail players from across the world, India provides an opportunity to invest. In

fact, it is predicted to represents the largest consumer market for next two decades.

The Retail Industry Continued in India in the Form of Kiranas Till 1980

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