Retailing as we ?an say is the sale ?f
g??ds ?r assets fr?m a fixed ?r parti?ular pla?e, su?h as a department st?re,
in small quantities f?r dire?t ??nsumpti?n by the pur?haser. Retailers are at
the end ?f the supply ?hain. Vend?rs ?f pr?du?ti?n pr?du?ts ??nsider the retail
pr??ess a ne?essary part ?f their ?verall distributi?n strategy as retailing pr?vides
them a rea?h t? the market with?ut whi?h the ??mpany ?r pr?du?t has n? life. Gl?bally,
the ??ntributi?n ?f retail se?t?r t? the w?rld’s GDP is alm?st ab?ut 27%. N?w, if we talk ab?ut the retail
industry in India, we ?an say that it is und?ubtedly ?ne ?f the fastest gr?wing
retail industries in the w?rld. Being the largest ?f all industries and a???unting
ab?ut 10% ?f the ??untry’s GDP, it empl?ys ab?ut 8% ?f the w?rkf?r?e. In India,
there has been seen a drasti? ??mmer?ial rev?luti?n in terms ?f pur?hasing behavi?ur
?f ??nsumers that is a m?dernizati?n and devel?pment fr?m sh?pping malls t?
multi-st?rey sh?pping malls that ?ffer sh?pping, entertainment and f??d under ?ne
r??f. It is be?ause ?f this trend that the retail se?t?r is witnessing a rev?luti?n
like many new f?rmats markets su?h as hypermarkets, supermarkets and department
st?res. India was als? the main supply destinati?n in the w?rld in 2016-17 and
parti?ipati?n in this ?ateg?ry is 55 per?ent. In India, mu?h ?f the middle ?lass
and even the untapped retail market is an attra?tive f?r?e f?r all retail
giants w?rldwide. ?ur a?tive p?pulati?n with an average age ?f bel?w 25 years,
al?ng with emerging ?pp?rtunities in the retail se?t?r, is ?ne ?f the main gr?wth
fa?t?rs in the Indian retail se?t?r. Gr?wth in the retail se?t?r is p?sitively expe?ted,
as many new entrepreneurs are entering the retail se?t?r. The t?tal retail industry
is estimated at 9 lakh ?r?re, ?f whi?h the ?rganized se?t?r represents ?nly 9 per?ent,
indi?ating a large p?tential market ?pp?rtunity. India’s retail se?t?r is experien?ing
a??elerated gr?wth and retail devel?pment is ???urring als? in Tier-II and Tier-III
?ities and n?t ?nly in large ?ities and metr?p?litan areas, whi?h pe?ple presume
it t? be gr?wing. The pur?hasing p?wer ?f the ??nsumer plays an imp?rtant r?le
in the de?isi?n making ?r the lifestyle ?f the pe?ple and here we ?an see that
the pur?hasing p?wer ?f the Indian ??nsumer is gr?wing in ?ateg?ries su?h as ?l?thing,
??smeti?s, f??twear, wat?hes, drinks, f??d and even jewellery. Due t? the expansi?n
?f the middle men f?ll?wing their pur?hasing p?wer and the ease ?f d?ing business
where there is a simplified tax stru?ture after the intr?du?ti?n ?f the G??ds
and Servi?e Tax, India ?an f?resee and expe?t gr?wth in the Retail Industry.
MARKET SIZE AND ?HARA?TERISTI?S
MARKET SIZE ?F THE INDUSTRY
The Indian retail
industry is ?ne ?f the fastest gr?wing industry in the w?rld. India’s retail se?t?r
is expe?ted t? gr?w t? $ 1,100 billi?n in 2020, fr?m $ 672 billi?n in 2017.
India is the
fifth fav?rite retail destinati?n in the w?rld. The ??untry is am?ng the highest
in the w?rld in terms ?f availability ?f st?res per ?apita. The Indian retail se?t?r
is experien?ing an exp?nential gr?wth and retail devel?pment is ???urring n?t ?nly
in large ?ities and metr?p?litan areas, but als? in level II and III ?ities.
This gr?wth and devel?pment pr?p?rti?nally in?reases the size ?f the retail
market as well. Healthy e??n?mi? gr?wth, an ev?lving dem?graphi? pr?file, an in?rease
in disp?sable in??me, urbanizati?n, tastes and ?hanging ??nsumer preferen?es are
?ther fa?t?rs behind the gr?wth ?f the retail market ?rganized in India. Even the
?nline retail market is expe?ted t? in?rease fr?m $ 14.5 billi?n t? $ 60 billi?n
between 2016 and 2020.
su?h as Walmart, GAP, Tes?? and J? Penney are in?reasing their pur?hases fr?m
India and are m?ving fr?m third-party pur?hasing ?ffi?es t? establish their
fully-managed and fully managed pur?hasing and pur?hasing ?ffi?es.
The Indian g?vernment
has intr?du?ed ref?rms t? attra?t f?reign dire?t investment (FDI) in the retail
se?t?r. The appr?val ?f G?vernment f?r 51% FDI in multi-brand retailers and in?reasing
the limit ?f f?reign dire?t investment t? 100% in the retail st?res ?f a single
brand is a sign ?f b??st f?r in?reasing the market size ?f retail and attra?ting
Gl?bal retailers. We ?an see that gl?bal retailers su?h as Walmart, GAP, Tes??
and J? Penney are in?reasing their pur?hases fr?m India and are m?ving fr?m
third-party pur?hasing ?ffi?es t? establish their fully-managed and fully managed
pur?hasing and pur?hasing ?ffi?es.
The retail se?t?r ??nsists ?f many
vari?us segments ?ut ?f whi?h s?me imp?rtant ?nes are F??d and Gr??ery, Apparel,
Jewellery, ??nsumer durables and IT, Furniture and Furnishing, Pharma?y and f??twear.
The year 2017 was fav?urable f?r the herbal-ayurvedi? brand and hen?e in up??ming
years there are pr?spe?ts f?r in?rease in the gr?wing herbal segment.
Key Drivers ?f Indian Retail Industry’s
Large w?rking p?pulati?ns
M?re ?f nu?lear
Easy ?ust?mer ?redit
and ??nsumer behavi?ur
Reas?nable real estate
The retail industry ?an be ?lassified
int? tw? ?ateg?ries:
?rganized Retail – These types of
retail stores are stores which are licensed and are registered. They are
usually located in urban areas and are hard to find in rural areas. They usually
have chains of stores. Departmental store and Hypermarket are few types of
Organized Retail Stores. Organized Retail stores contribute to as less as
around 8% in Indian Retail Industry.
Unorganized Retail – These types of
retail stores are stores which are independent in themselves and lack a backing
of a central entity. They are usually found in rural areas where people usually
refer to such shops as kirana stores. They account for around 92% of the Indian
As we say that the world is not
constant and keeps changing over time. So is the scenario with the retail
industry where there has been drastic reformation and changes over time where
the retail industry has developed a lot in the past few decades and always
moving towards more enhancement and growth. If we see the broader view first,
we can see that relation industry was there in earlier time, though it wasn’t the
way we see it today in formats of malls and supermarkets. In earlier times, the
retail industry was in the form of haats, mela, and mandi. Later these
traditional formats started to establish and with time these haats and mandis
transformed to kirana or convenience shops. And now we are witnessing the
emerging formats of the retail industry where everyone is moving towards the
organized retail, that is speciality malls, hypermarket, and multiplexes. Hence
we can see that with time, there has been a drastic evolution in the way retail
industry has transformed.
Now, if the trend is more clearly
understood, we can see that India was a country composed of hundreds of cities and towns, before
liberalization. India at the time was a nation that strived for development.
The effect of this hunger has been witnessed on several levels and this has
brought a wonderful opportunity for the retail industry to thrive. The
evolution of the retail sector began first in the metropolitan areas and in the
main cities and then ended up filtering also in the sub-urban and rural
markets. The retail trade in India was initially completely disorganized and
appeared in the form of small shops run by small and medium-sized entrepreneurs
in the form of corner shops. Some international actors such as Levi’s, Pepe,
Marks and Spencer, etc., had entered the market, directed to the upper middle
classes of the Indians. However, what is important to keep in mind, is that
over 50% of the population composed of people belonging to the medium-low and
low class, the whole range of the market had not yet been covered. This shift
between supply and demand was subsequently captured by brands such as Big
Bazaar and Pantaloons, which made their products available to all categories of
people and today have the first benefit of the motorcyclist in the Indian
retail market. Another phenomenon that probably contributed to growth in the
Indian retail sector was the explosion of shopping centers across the country.
This commercial culture brought with it a retail format organized in India that
was previously lacking. Today these shopping centers are changing the way Indians
In the present scenario, we can say that the retail industry is undergoing a change where retail has become both physical and digital. Retail industry is doing very well in the market and as a matter of projections it can be said that the organized retail in India will do well and by 2020 will try to grab 24% of the retail market. But presently, the retail sector still needs to come up with innovative concepts and models as presently retail sector is actually facing a threat from discounts provided by e-commerce companies. But the use of analytics as well as having a keen understanding of the changing demands of the customers will help the retail industry. India is und?ubtedly ?ne ?f the fastest gr?wing retail industries in the w?rld. Being the largest ?f all industries and a???unting ab?ut 10% ?f the ??untry’s GDP, it empl?ys ab?ut 8% ?f the w?rkf?r?e.
The future of
retail industry sees a bright scope as there are many present changes in the system
which is directly linked to the benefit of the retail industry. The allowance
of 100% FDI in single brand retail, the ease of doing business because of
implementation of GST, the increase in the purchasing power and the rapid
increase in urbanization, the ease of getting credits, are some of the ways
which make the Indian retailing sector more attractive and hence even in the
year 2017, it could be seen that the FDI inflow was US$1098.81 million during September.
can also be seen for the year 2017 that the India’s FDI’s Confidence Index
ranked up a level surpassing Australia. And because of the rising middle class
and the increasing money supply with the customers, India was also ranked top
in the Global Retail Development Index. The private label space in the
organized Indian retail industry has begun experiencing an increased level of
activity. The share of private label strategy in the US and the UK markets is
19 per cent and 39 per cent, respectively, while its share in India is just 6
percent. Thus this gives a tremendous opportunity for the home grown label to
expand its base. India’s price competitiveness attracts large retail players to
use it as a sourcing base. Many international retailers are increasing their
sourcing from India and are moving from third-party buying offices to
establishing their own wholly-owned/wholly-managed sourcing and buying offices.