Retailing in India

Retailing in India: Challenges And Opportunities

Written By, Dr. Hemant K Panda [Professor & Pricipal] || Annjaan Daash [Head Placement]

Abstract

The marketing concept means satisfying customers’ wants and needs at a profit. Retailers are finding that to maintain competitive advantage, they must exceed customer expectations. Thus, when extending the marketing concept from merely satisfying customer wants and needs, integration of retailing functions becomes paramount.

Because the world of retailing is constantly changing, retail professionals must be up to date on the latest techniques and theories that affect (both positively and negatively) the retail firm. Understanding customer value allows retailers to incorporate consumers’ wants and needs into their integrated retail management plans. Without this understanding, a retailer is at a competitive disadvantage.

It is important to distinguish between providing services and being and being a service retailer. In services retailing, the product being sold is a service. Most retailers provide some type of service beyond their core offerings, but they are not service retailers if their core offerings are tangible as opposed to intangible.

Technology has created capabilities that were never imagined possible. From online banking to buying groceries and other products online, e-tailing is becoming an increasingly important channel of distribution. It is important for retailing professionals to stay current with all the changing technologies and to understand the difference between selling tangible products versus intangible services as well as the impact of technology on their retail businesses. As we move forward into the twenty-first century, ethics and social responsibility will play an increasing role in retailers’ visions and missions.

KEYWORDS: Credit Risk, Macroeconomic Determinants, Bank Specific Determinants, Post Financial Crises Period, Public Sector Banks, Ratio Analysis, Descriptive Statistics, and Panel Data Regression

Introduction

Retailing provides considerable value to consumers. It is giving people opportunities for rewarding and challenging careers. Experiences show the world over, the nations that have enjoyed the greatest economic and social progress are having a strong retail sector.

Retailing has grown as the popular method of conducting business as it offers easier access to a variety of products, freedom of choice, a higher level of services, and better value for customers owing to fierce competition among retailers for grabbing market share. Statistics reveal that retailing with total sales exceeding US $18 trillion in 2020, is one of the biggest private enterprises in the world.

It is estimated that retailing sector accounts for 10 percent of GDP in Western economies. Among developing countries, this sector accounts for 10 percent of the GDP in India and 8 percent of the GDP in China. In developed economies like the UK, this sector had £230 billion in sales, which was 35 percent of the total consumer spending in 2018.

Globally, the growth of organised retail is predominantly an urban phenomenon. In developed countries, more than three-fourths of total retail trade is being handled by the organised sector. According to the UN Report on the “State of World Population 2007”, nearly 3.3 billion people would have shifted to cities by 2008 and almost 5 billion by 2030.

The next few decades will witness unprecedented urban growth in the developing world notably in Africa and Asia. By 2030, towns in the developing world will make up 80 percent of urban humanity. In India, out of 15 million retail outlets, only 2 percent are in the organised sector, as per the recent report of McKinsey & Company, India has the highest density of retail outlets in the world.

There are about 15 outlets per 1000 inhabitants in India compared with 4 or 5 per 1000 inhabitants in developed countries. According to A.T. Keamey’s 2007 Global Retail Development Index, the organised retail industry in India is growing at a rate of 40 percent a year. It predicts that organised retailers, who now command about 2 percent of the total turnover of about Rs. 15,75,000 crore ($ 350 billion), will increase their share to over 5 percent by 2010 when retail turnover is projected to touch Rs. 19,21,500 crore ($ 427 billion). On the whole, the future of retailing in developing countries including India is promising.

In India, the growing middle class, changing demographic profiles (nearly 52 percent of the total population are below 25 years), increasing income levels, urbanization, technological revolution, and globalization are fueling growth in the retailing sector.

However, the entry of big corporate retailers, both foreign and domestic, is posing serious challenges to the survival of 98 percent of small and unorganised retailers in India. Moreover, the issues irk, need for adequate investment, trained manpower, appropriate modem technology, retail: mix model, regional inequalities, 24-hour retailing, etc. are to be addressed in the right perspective, particularly in the context of ongoing economic reforms and consequent liberalisation in the country.

In this paper, the authors have made attempts to analyze the various challenges and opportunities like the entry of giant-size foreign and domestic retailers, lack of skilled manpower and other infrastructure, government policies, high growth potential, level playing field, etc., facing the retail sector in India with some conceptual discussions on retailing.

Concepts Of Retailing

The American Marketing Association (AMA) has defined retailing as activities involved in selling directly to the ultimate consumer for personal non-business use. According to Michael Levy and Barton A. Weitz, retailing is the set of business activities that adds value to products and services sold to consumers for their personal or family use. A retailer is a person or business that sells products or services or both to customers for their personal or family use.

A retailer is a part of the supply chain for any product that it sells. A retailer comes at the end of the supply chain and provides the final link between the producer and consumer. Thus, a retailer emerges as a vital link between the manufacturer and/or other intermediaries and consumers. Retailers attempt to satisfy consumer needs by having the right merchandise, at the right price, at the right time, and at the right place where the consumer wants it.

Hence, the key to successful retailing lies in offering the right product, with the right price in the right place, at the right time, and making a profit. In order to accomplish the objectives of consumer satisfaction and making a profit, retailers must understand what customers want and what competitors are offering now and in the future and have to perform the functions such as (i) providing an assortment of products and services, (ii) breaking bulk, (iii) holding inventories, (iv) providing services and (v) increasing the value of products and services.

Retailers serve as purchasing agents for consumers and sales specialists for producers and wholesaling middlemen. They are required to anticipate customers’ wants, develop product assortment, and even finance. There are different formats in which the retailer undertakes retailing business. Many new formats are evolving and today modern retailing is using the

popular formats like department stores, discount stores, supermarket, hypermarket, specialty store, convenience store, cash and carry stores, do-it-yourself stores, warehouse, drug stores, mail-order, restaurant, etc.

Foreign Multinational And Indian Retailers

Some of the giant foreign multinational retail traders are Walmart, McDonald, Kroger, Home Depot, Kmart, Albertson, Sears, Target, Safeway, J.C. Penny, Costco, Walgreen (belonging to USA), Tesco & J. Sainsbury of UK, Carrefour, Intermarche, Auchan, Eleclere of France, Metro, Rewe, Edeka/Ava, Tengleman of Germany, Ahold of Netherlands and Ho-Yokadu, Aeon, and Daiei of Japan. Big Indian retailers, to name a few are: Stop, Globus, Westside (lifestyle & fashion retailers), Wills Lifestyle & Landmark (apparel retail), Archies, Music World, Crosswords (books, gift, music retailers), and Health & Glow, Apollo (Drugs & Pharmacy Retailers).

Some of the popular retail shops of Indian corporate houses are Food World of RPG Group, Westside, Landmark, Star India, Bazaar, Trent, Chroma of Tata Group, Reliance Retail, Reliance Fresh, Reliance Mart of Reliance Group acid Big Bazaar, Pantaloon, Food Bazaar of Future Group of Kishore Biyani and his NRI partner V.P. Sharma.

The retail business of these corporate houses is making a significant dent in India’s retail market. Bharati Enterprises of Sunil Mittal joined hands with Walmart of the US, the world’s largest retailer on 6′ August 2006 to enter the backend business of wholesale trading and also the front-end retail business in the country. The smaller players operating in India’s organized retail sector are Subhiksha, Trinetra, Nilgiri, etc.

India Scenario

Today India is in the midst of a retail revolution. Besides other factors, rising incomes and increased consumerism are fueling retail growth in the country.

Table 1: India’s Retail Landscape

YearRetail Trade in billion $ (US)
1998201
2000204
2002238
2004278
2006*321
2008*368
2010*421

*Indicates Estimates

Source: A.J. Kearney. Report on Retail in India.

Table 1 indicates the magnitude of retail trade in India. The retail trade, which was US $ 201 billion in 1998 is estimated to touch US $ 368 billion in the year 2008 and US $ 421 billion in 2010. The Global Retail Development Index (GRDI), a measure of global retail attractiveness among thirty (30) emerging markets, released by global market consultancy firm A.T. Kearney reveals that India has moved from second place to first place by displacing Russia in 2005. This indicates that India is the most attractive destination for directing investments into its retail sector.

Further, the annual GRDI 2006 has ranked India at the top of the most promising consumer markets in the world and accorded ‘Peak Attractiveness’ status to it. It adds that increasing urbanization and rising purchasing power parity (PPP) among the Indian middle and upper middle class have resulted in increased demand for retail goods in the country.

Another distinguishing feature of India’s retail market is that unorganized segment accounts for 98 percent of the total retail market comprising small, independent, owner-managed traditional shops like kirana shops, paan/beedi shops,

daily convenience stores, bazaars, street vendors, etc. Thus, Indian organised retail is only 2 percent of total retail trade as against 90 percent in the USA, 80 percent in the UK, and 70 percent in Western Europe. Even in some developing countries, organised retail accounts for 40 percent in Brazil, 35 percent in South Korea, and 20 percent in China. Hence, the organised retail segment of India holds greater potential for growth.

Interestingly, India’s retail sector is composed of a large number of small retailers on the one hand and a small number of large retailers on the other. Nearly 40 million people make their living from retail trade majority run small trades as street vendors, kirana shop owners, etc. mostly in unorganised sector. Small traders usually cater to the needs of flow-value, high-frequency customers. On the other hand, organized retailers essentially large, but small in numbers operate from glitzy malls and superstores and usually cater to the high value-low frequency customers. As CII &

A.T. Kearney’s Study of ‘Retail in India’ predicts that India’s retail trade would touch US $ 421 billion in 2010, and organized retailing is getting momentum. A.T. Kearney’s 2007 Global Retail Development Index has revealed that India’s organized retail segment is growing at the rate of about 40 percent a year and its share will increase to 5 percent of total retail trade by 2010 from its present 2 percent share.

The other contributory factor to the growth of the retail sector, particularly the organised retail trade in the country is its growing middle class with their rising levels of income. The middle-class population in India is around 480 million with monthly household income (MHI) ranging from US $ 150 to $ 1000. Further, the average household income in urban areas has grown at 5 percent CAGR (Compound Annual Growth Rate) over the last decade. Thus, the burgeoning middle class and significant rise in urban household earnings are fueling growth in India’s retail sector.

Another factor visibly affecting India’s retail growth story is the rising proportion of the young population in its total population. More than 52 percent of its population is less than 25 years of age which experts coin as a ‘demographic dividend’ India is going to reap from its young population. Hence, in the years to come, age profiles of spenders will tilt towards Youths who have a higher propensity for spending and consumption. Hence, the demographic transition in the economy is found to enhance organised retails mostly in urban areas and to some extent in rural areas.

A study titled “Young, Rich and Restless” reports that seduced by luxury brands and armed with a pile of riches salted away by their working mothers and fathers, roughly 40 million Indian youths in the 15-21 age bracket are spending close to Rs. 1,90,000 crore of their parent’s money every year.

Showcasing a young girl, the gadgets she holds, externally amount to Rs. 1,72,700 (sunglasses — Fendi costs Rs. 23,000/-, video iPod – 60 GB Rs. 26,500, watch-Guess Rs.13,500, mobile phone— Nokia Rs. 6270 costs Rs. 16,000 and a Big-Louis Vuition, Manhattan GM leather-bag costs Rs. 93,700). This clearly demonstrates the power of youth spending and its impact on the retail trade of India.

Research Methodology

Research Methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. A research design is a conceptual framework within which research is conducted and here it constitutes the blueprint for the collection, analysis, and measurement.

This study is done by means of descriptive research to find out the satisfaction of retailers on their overall business and at the store point which the researcher has tried to ask who, where, when, and what types of questions to the customers and retailers and tried to find out the attributes that affected them while making their selling and purchasing decision.

The sampling Technique is a crucial decision to be made after choosing the group to take a sample from it. The technique is based on the –

  • Choosing a sample with or without replacement
  • Bayesian approach or Traditional approach
  • Probability or Non-probability

Foreign Direct Investment (FDI) in The Retail Sector in India

The Government of India, though initiated the process of opening up its economy in the mid-eighties, pursued the policies of economic liberalisation and globalisation vigorously from July 1991. Reforms in its financial sector, external trade sector, foreign investments, infrastructure, public sector, etc. have been undertaken on a significant scale since then in order to make India a globally competitive, developed, and preferred destination of international players for doing business here in the country.

Prior to the announcement of FDI policies by the government on January 24, 2006, direct investment by foreign retailers was not allowed in India. However, foreign retailers have access to the Indian market through indirect means, enumerated as follows:

Franchising

Franchising is the most preferred mode through which foreign players have entered the Indian market. Franchising is a contractual agreement between a franchiser and a franchisee that allows the franchisee to operate a retail outlet using a name and format developed and supported by the franchisor.

International retail giants like Wal Mart, Subway, Dominos Pizza, Pizza Hut, Lacoste, Mango, Nike, Marks, Spencers, etc., have made inroads into India’s retail market through this mode. For setting up franchising operations, the foreign players are required to obtain approval from the Reserve Bank of India (RBI)and to comply with FEMA (Foreign Exchange Management Act).

Under this mode, RBI often imposes conditions that franchisers have to bring in foreign investments and set up a base for doing operational activities. A foreign franchiser not interested in direct investment has to Provide technical assistance to the franchisee; sometimes also the foreign retailers import all Product ranges under franchising mode with the permission of the RBI.

Wholesale Cash-and-Carry Operation

Wholesale Cash-and-Carry is another route through which international retailers have entered the Indian market. The wholesale cash and carry operation means any trading outlet where goods are sold at wholesale rates only to dose (retailers and businesses) who intend to use them for commercial purposes and not for personal consumption.

Germany’s Metro Cash and Carry GmbH and South Africa’s Shoprite Checkers have entered the Indian Metro to wholesale cash and carry operations. Metro Cash and Carry GmbH was the first foreign retailer to bring in 100 percent FDI through this route to India. The proposals for FDI in wholesale cash and carry mode are required to be approved by the Foreign Investment Promotion Board (FIPB) on a case-by-case basis.

Manufacturing and Local Sourcing

Foreign companies that have set up manufacturing bases and/or sourced products from local manufacturers are permitted to do retail business in India. These are allowed to sell products to Indian consumers through franchising, local distributors, existing Indian retailers, or their own outlets. Foreign companies like Bata, GIVO, Sony, Samsung, Levis, and Tommy Hilfiger are

doing retail business in India under this mode. However, these foreign companies are required to obtain permission from the RBI and/or FIPB on a case-by-case basis.

Test Marketing

Test marketing is another route through which foreign retailers have entered the Indian market. Under this mode, these companies can test market the product in India for two year period by the end of which they are required to set up manufacturing facilities in India. Nokia, Amway, Oriflame, etc. have entered the Indian market by this route. Under this mode, foreign retailers are required to obtain approval from Foreign Investment Promotion Board (RIPB) on a case-by-case basis.

Distribution

Distribution is also another route through which foreign companies have entered India’s retail sector. Foreign retailers like Hugo Boss and Swarovski have set up distribution offices in India and these offices supply products to local Indian retailers. These foreign companies are required to seek permission from the RBI before undertaking retailing business under the distribution mode.

Government Of India’s FDI Policy on The Retail Sector

  • The Government of India on January 24, 2006, inter alia, announced the policy of 100 percent FDI through automatic routes in wholesale trading and export trading.
  • The Union Cabinet has also decided to allow FDI up to 51% for retail trade in single-brand products. This is aimed at attracting foreign investment, technology, and best global practices besides demands for such brands in India;
  • The Indian Government has mandated that international companies seeking to sell in India through their own single-brand retail network would be required to seek approval from the FIPB for the entire range of products they sell under one brand name. Any addition of an item or product of the same brand to the list would also require prior approval of the FIPB.
  • The retail FDI policy, as announced by the Government, also stipulates that foreign companies, which have multiple brands will not just seek separate clearances for other brands, but also have to open separate outlets to sell their products under a single brand. This implies that a foreign retailer in India, under the new rule, can sell a single brand of products in one outlet only.
  • Companies have also been restricted from introducing local brand variants as often multinationals tend to do when entering a new market in order to take advantage of the local customer of the region. Instead, they have to stick to the same international brands.

Debatable Issues Regarding Opening up of The Retail Sector to FDI

The debate regarding the opening up of the retail sector to FDI has again been intensified with the announcement of the government to allow 51% FDI in single-brand retail. Though the supporters ofFD1 in the retail sector argue that FDI would improve productivity and efficiency of the retail sector, quality of employment, increase the speed of development of

modern formats, enhance sourcing, encourage investment in the supply chain, link-local suppliers, farmers, manufacturers to global markets, ensure a quality product, better service, and shopping experience for consumers, lowering of price due to the operation of low-cost global retailers, the critics argue the entry of FDI in retail to the contrary. It is feared that the entry of FDI in India’s retail sector would result in the following adverse consequences.

Displacement of Domestic Retailers and Large-Scale Unemployment: India’s trade is mostly in the hands of unorganized sector accounting for 98% of total retail trade in the country. Only recently organized foreign retailers through indirect routes like franchising, wholesale cash and carry, test marketing, etc. have entered into India’s retail trade sector.

It is apprehended that the entry of foreign players would drive the domestic unorganised retailers out of business leading to widespread unemployment. International experiences show that in countries like China, Malaysia, Thailand, etc., domestic retail trade has shrunk due to the entry of foreign MNCs into the domestic retail market leading to unemployment.

All China Federation of Trade Unions have reported the shrinkage of domestic retail trade with the entry of foreign retailers into the market. Chinese newspapers have also reported that a good number of Chinese products have to stop their production because competition from Wal-Mart has reduced their margins to such a low level that the domestic producers found it impossible to sustain themselves.

In Southeast Asian countries, it is alleged that domestic retailers were marginalized and unemployment rose after the domestic retail sector was kept Opened to foreign retailers. Even in advanced countries like France, Denmark, etc., there were protests against the operation of US retail giants in their countries. Within the US, the Municipal Corporation of California and Chicago have imposed a ban on the opening of Martstores.

In Japan, South Korea, and France, foreign retail traders are banned to enter the trade in Petroleum products, rice, tobacco, salt, fresh vegetables, meat, and intoxicants. h d stark reminder of the fact that countries like China, Thailand, and Malaysia, which had opened their retail sector to FDI were forced to reconsider this policy and enacted new laws to control the entry of foreign retail MNCs in the domestic retail trade.

Even after a decade-and-a-half of the progress of economic reforms in India, as per the latest data provided by the 60th Round of Sample Survey for 2004-05, unemployment levels have further increased. It has been estimated that the overall rate of unemployment was around 9.5% in 2004-05 as against 7.3% in 1999-2000.

It is alleged that economic reforms in India have resulted in jobless growth. In a developing country like India, 93% of labour force, engaged in unorganised sector, does have any system of social security. This obviously raises questions about the survival of small traders in the event of the entry of organised foreign retailers.

Another point is about the coexistence off the large-corporate sector vis-a-vis the unorganised sector. There is a shrinkage of the share unorganized in the net domestic product from 70% to 57% during the last two decades, but there has been an increase in the unemployment share of unorganised sector from about 89% to 93%.

Obviously, the organised sector has failed to absorb workers from unorganised rather resulted in the process of casualisation of the workers in the sector. Hence, the entry of foreign retailers and big corporate Indian retailers, which are mostly organized in nature will not generate adequate employment but rather will lead to large-scale unemployment

Marginalization of Consumer And Small Traders

Most of the giant foreign retailers at the initial stages deliberately keep their prices low for two-three years so as to drive out domestic retailers since these giant retailers have deep pockets. Once domestic retailers are forced to close their shops, giant multinationals will increase their prices.

Hence the fact that MNCs reaping economies of scale would be able to sell their goods at cheaper prices thereby benefiting the millions of consumers never operates in practice. Studies reveal that retail MNCs operating in the UK charge 40% higher prices in the absence of any alternative. The consumers have to pay higher prices once a monopoly or an oligopoly situation is created, the giant MNC buys cheap and sells dear.

The desirability of FDI in Retail For India’s Economic Growth

In India, FDI should be welcomed in infrastructure, heavy industry, manufacturing, etc., which will increase the country’s productive capacity to have a GDP growth rate of 9 to 10 percent on a sustainable basis. The country has adequate capacity to run its retail business in an efficient manner. Opening the floodgate of the retail sector to FDI will only legitimize the profits of big MNCs without helping the small traders in the country.

It is often criticized that single-brand retail FM will help in the establishment of more luxury malls. It will imply more good-looking shops. Ultimately FDI will not help us in enlarging our production capacity in either the manufacturing or infrastructure sector. It simply aims at serving the interests of big business catering to the needs of affluent-class people.

Compared to foreign multinational retailers like Wal-Mart, McDonald, Metro Cash and Carry Ahold, Carrefour, and Tesco, the majority of domestic players in the organized retail sector are considered minuscule. If the floodgate of FDI is opened without allowing the domestic retailers to scale up their operations and attain critical mass, then the Indian players would be completely wiped out from the scene.

Hence, the opening of the sector to FDI should be carefully planned and graduated so that the benefits of foreign direct investment like inflows of capital, technology, and best management practices leading to efficiency in the sector will take place without adversely affecting the interests of millions of small domestic retailers.

Other Issues in The Organised Retail Sector in India

Lack of Trained Manpower

Organized retailing, for its effective functioning, always needs trained manpower to work efficiently in modern retail formats like Specialty Stores, Hyper Market, supermarkets, Cash and Carry Operations, Departmental Stores, Discount Stores, Mall- retailing, etc. Unless the infrastructure of the training facility is created adequately in the country, the Indian organized retailer cannot deliver goods.

The efforts of the Retailers’ Association of India, which started organizing training programmes for retail personnel in 2015 are commendable. Keeping in view the current shortage and greater demand for skilled retail personnel in the near future, many management institutes in the country have started postgraduate courses in retail management. This will hopefully take care of the requirement of retail personnel in the years to come.

Need for Quality Real Estate

India is having more than 15 million retail outlets out of which 98 percent of the outlets are less than 500 square feet in area. Moreover, the per capita retailing space is nearly 2 odd square feet compared to 69 square feet in the USA. Hence, there is a greater need for real estate both quantitatively and qualitatively for enabling the effective functioning of modem retail in the country.

Technology Requirements and Long Hours of Retail Operation

With the technological revolution, retail MNCs are using modem technology like centralized network-based processing architecture to get better control and more visibility into the supply chain while trying to achieve efficiency in stores

operation. Hence, organized retailers in India Should use Enterprise Resource Planning (ERP) packages for achieving operational efficiency so that they can compete effectively with giant foreign retailers.

In the era of cut-throat competition, people in their workplace are overloaded, more tired arid exhausted finding less time for shopping. Even the leisure times of people engaged in BPO jobs rarely match the hours of retail business. Hence, the facility of tele-retailing and even 24-hours retail stores should be provided by modern retailers to the work-stressed consumers of today.

Impact of Organised Retailers

It is seriously alleged that organised retailers have an adverse impact on small unorganised retail businesses and employment. Wide-scale protests are made by small retailers against Reliance Retail and Spencer’s Stores in the state Similar protests are also found against Reliance Retail Stores in Bhubaneswar, Orissa, etc. In February 2007, a month after Commerce and Industry Ministry vetted the proposed Bharti-Wal Mart tie-up, UPA chairperson Sonia Gandhi wrote a letter to Prime Minister Dr. Manmohan Singh, raising concerns over Wal Mart’s proposed entry into India. Mrs. Gandhi urged Singh to examine the impact of transnational supermarkets on the livelihood security of people engaged in small-scale operations before going further.

Immediately, the Minister for Commerce commissioned a study from the economic think tank ‘CRIER (Indian Council for Research Industry on International Economic Relations) to determine the impact of large foreign and domestic retailers on small unorganized ones.

While ICRIER has still to submit the report, the Government will find it hard to ignore such opposition from its coalition allies-left parties. It would be better on the part of the Government to follow a cautious and well-planned retail trade policy without any haste.

Findings

The research findings of the study are

  • Some of the important factors like Price, variety, game zone, timely delivery, and product offers cannot be ignored as these are not expected by customers if it is fulfilled then they will increase customer satisfaction and if not fulfilled they will create dissatisfaction. These are necessary to attract new and existing customers and also to satisfy the retailers
  • Products of various brands and varieties should be available during the visit of customers to the retail outlets and the service provided by the employees/staff needs to be the best and they should be able to explain about the product because if these are fulfilled it will increase the satisfaction level proportionately.
  • Factors like payment mode and parking should be given the most emphasis to satisfy customers by providing them with a satisfactory purchase experience the retailers.
  • Most of the customers visiting the retail outlets are females and are from the upper and higher middle-class people.

Conclusion

The retail trade sector of India occupies an important place in the socio-economic growth strategy of the country. Nearly 40 million people earn their livelihood from retailing businesses and the majority of them are small traders, Kirana shop owners, street vendors, etc. who are essentially unorganised.

The foregoing analysis quoting CII & A.T. Keamey’s Study Group’s report reveals that India’s retail trade could touch US $ 42 billion representing 5 percent of total trade from its current share of merely 2 percent by the year 2010. The annual Global Retail Development Index 2006 has accorded `Peak Attractiveness Destination Status’ to India’s retail sector among thirty emerging markets of the world.

At this juncture, the country is witnessing retailing boom being propelled by increasing urbanization, rising purchasing power parity (PPP) of ever-growing India’s middle class, changing demographic profiles heavily titled towards the young population, technological revolution, intense globalisation drive, etc.

In view of the huge future growth potential of this sector, big players both foreign the organized retailing are malting bee-line f their entry into the sector. It is also discernible and Indian from the foregoing analysis that the Government of India has permitted foreign retailers with 51 percent FDI in single brand products besides allowing indirect FDI entry through franchising, wholesale cash and carry operation, manufacturing and local sourcing, test marketing, and distribution mode.

The country is witnessing massive protests in different parts of the country like Bhubaneswar, Kolkata, Bangalore, Lucknow, etc., mostly demonstrated by small players (unorganised small retailers) who apprehend the entry of giant organized retailers both Indian and foreign would threaten their survival and livelihood.

As India is committed to pursuing the policy of economic liberalization and reforms since 1991 and also being the founder member of WTO, it cannot restrict the entry of large players including FDIs now. However, in order to ensure healthy competition, the policy of FDI in the retail sector should be gradual allowing domestic retailers to scale up their capacity and achieve critical mass so that the giant foreign MNCs cannot monopolies the benefits of the sector.

The Government of India’s initiatives such as monitoring the entry of FDI by PM0 (Prime Minister Office), regulating large retailers not to supply cheap imports sourced from countries with low manufacturing costs, devising preventive steps to thwart monopolies that could disadvantage suppliers mostly fanners by dictating purchase price and also commissioning a study to measure the impact of large retailers by Department of Industrial Policy and Promotion (DIPP) on small traders are, in fact, the moves in the right direction for the orderly growth of the retail sector in the country.

The requirements of trained manpower to work efficiently in modern retail formats, quality real estate, long hours of retail operations, etc. have been thoroughly focused in the analysis to achieve inclusive growth i.e., without jeopardizing the employment and livelihood security of millions of small traders and their families dependent on them.

References

  1. Adhikari, A., “Biyani vs. Ambani”, Business Today, Vol. 15, No. 9, New Delhi, May 7, 2006, pp. 80-87.
  • Anand, M & Kothari, A., “Who is Afraid of FDI”, Business World, Vol. 25, Issue-22, New Delhi, October 24, 2005, pp. 30-38.
  • Anand, M., “FDI in Retail: Infinite Scope for Deals”, Business World, New Delhi, Vol. 26, Issue 23, New Delhi, January 8, 2007, pp. 8-9.
  • Bajaj, C., Tali, R and Srivastava, N., Retail Management, Oxford University Press, New Delhi, 2005.
  • Berman, B. & Evans, J.R., Retail Management: A Strategic Approach, 95 Edition, Prentice Hall of India Pvt. Ltd., New Delhi, 2004.
  • Bijapurkar, R., “Retailing Fever: Bring I the Customer”, The Economic Times, Kolkata, May 29, 2007, p. 14.
  • Biyani, K., “Retail Revolution: Lure of huge Consumer Base”, Survey of Indian Industry”, 2007, The Hindu, Chennai, 2007, pp. 285-286.
  • Chandmekar, G., “Proud Changes in Retail Area”, The Hindu Slimy of Indian Agriculture, 2007, Chennai, 2007, pp. 5-7.
  • Chattopadhyay, S.S., “Unique Coexistence”, Frontline, Vol. 24, No. 13, Chennai, June 3,1 to July 13,m 2007, pp. 14-16.
  • Datta, B., “Bank to the Big Players: Benefits of Large Retail Chains Outweighs Costs”, The Times of India, Bhubaneswar, August 7, 2007, p. 18.
  • Deshpande, R., “‘Retail FDI Back on Agenda”, Times Business, Times of India, Bhubaneswar. July 25, 2007, p. 9.
  1. Dutt, R, “Opening Retail Trade for FDI: A Retrogressive Measure”, Mainstream, Vol XLIII No. 50, New Delhi, December 3, 2005, New Delhi, pp. 4-8.
  2. Dutt, R, “Single-Brand Retail FDI: Rhetorics& Reality”, Mainstream, Vol. XLIV, No. S. New Delhi, February 11, 2006, pp. 7-10.
  3. Guha, R. & Ma, M.S., “Big Retail may have to Find Mom and Pops”, The Economic Times, Kolkata, September 12, 2007, p. 14.
  4. Jayaram, A. and Krishna V., “The New Middleman”, Business World, Vol. 27, Issue-‘. New Delhi, 9 July 2007, pp. 34-41.
Facebook
Twitter
LinkedIn
Pinterest

You might also like

Latest Videos

Admission 2024

rcm, bhubaneswar

RANKED AS THE 4TH BEST BUSINESS SCHOOL IN EASTERN INDIA.

BBA | BCA | MBA | PGDM | MCA | MA-TA

About Us

Regional College Of Management (RCM College) is a Leading education provider with foremost facilities essential for the all-round development of a student.

Recent Posts

  • Follow Us

Leave a Comment

Your email address will not be published. Required fields are marked *