Retailing in Indiaby Udit Jain on June 16, 2007
Retailing in India
Although “organised” retailing has been in practice for a long time in some product categories like textiles and shoes, they have been driven by the manufacturer. The changes witnessed in the industry where the retailers are organising themselves started only in the last decade.
The traditional small and unorganised entrepreneurs dominate the sector. India has the
highest number of retail outlets (more than 12 million) in the world, though the per capita
retail space is the lowest (CII-Mckinsey & Company, 2000). The industry is estimated to be about $180 billion. The organised sector represents a mere 2 per cent share of this market (Business Today, 1999). It is very low compared to other countries including those in Asia. Up to 80 per cent of all retail sales in the United States is controlled by the organised retail sector. The corresponding number in Western Europe is 70 per cent. The scenario of organised retailing in Asia is lopsided. In Taiwan the share of the organised sector is 81 per cent, followed by Malaysia and Thailand, at 45 and 40 per cent, respectively, whereas China and India stand at 15 and 2 per cent, respectively (Fernandes et al., 2000).
Each of the new retailers is trying different formats. Most of them are yet to find out a
successful formula. With the emergence of big players (both local and national), the street corner kirana shop has also transformed itself, giving rise to an unique format. A number of traditional “kirana” shops have expanded in size allowing selfservice and provided customers with deeper and wider assortments. These “transformed kirana stores” have offered facilities like home delivery, replacements and credit. There is a lack of studies that have focussed on the nature of shopping behaviour exhibited in the Indian environment. Most research in this area is still proprietary in nature and hence is outside the public domain. A few articles are beginning to appear in Indian journals. These articles have looked at the marketing decisions taken by the retailers/companies using point of sale (POS) data (Banerjee and Banerjee, 2000; Banerjee and Divakar, 2000). A study by Venugopal (2001) has investigated the retail business from the perspective of a retailer’s expectations from the suppliers. Another study showed that shoppers demanded good service as well as quality merchandise from the retailers (Business Today, 1999).
In such a scenario, there remains a need for studying the shoppers’ behaviour. Given the rapid rate at which new retail formats have been introduced in the Indian market in recent times, many with limited success, it is imperative for Indian businesses to understand changing shopping behaviour among consumers, especially with regard to their preferred points of purchase. With growth in disposable incomes and improving infrastructure, consumers have a wide choice of stores where they can choose to shop. It is therefore, necessary for retailers to understand shoppers’ motivations and to attract customers residing beyond the, hitherto considered, catchment areas around their stores.