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Retail In Rural India Essay

5084 words - 21 pages

RETAIL IN RURAL INDIA

Introduction
Introduction of modern-format, large-scale retailing is nothing less than an innovation in the area of Indian distribution and retail activities. Unlike most other developed and developing markets of the world, modern-format large-scale retail in India is a recent phenomenon. While “India’s retail sector is expected to grow from its current $350 bn. to $427 bn. by 2010” (Morierty, et al, 2007 : 9), modern retail is expected to grow from $8 bn. to $22 bn over the same time-period. It is re-defining consumers’ attitude towards shopping. It is also forcing the consumer product companies to re-define their ways of doing business – while they have been used ...view middle of the document...

In terms of formats also, urban India today has almost all the major retail formats namely supermarkets, hypermarkets, supercentres, convenience store, forecourt retailer, warehouse club, discounters, dollar stores, etc.

This innovation in Indian retail, which began in urban India, has remained confined mostly to urban India. And this trend is expected to be maintained in the foreseeable future. As per the estimates of Technopak Advisors – the leading Indian retail advisory firm (Indian associate of Kurt Sulmon Associates) – investments to the tune of US $30 bn. are expected to take place in the Indian retail sector over the next 4-5 years and 94% of these are supposed to be in the urban markets.

However, this innovation is gradually reaching out to the villages too - the Rural Indian – the home of 72% of the country’s population. As observed in 2004, large-scale retailing had reached out to rural areas even in certain pockets in states like Maharashtra and Tamil Nadu. There are a large number of sugar factories in Maharashtra – many of them run as co-operatives - which have contributed to emergence of pockets of relative affluence. Those which are professionally managed have expanded in areas like poultry, dairy, liquor and also in the field of education. Some have started medical and engineering colleges in
This case has been developed by Prof. Anirban Sengupta, as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administration situation. Copyright@2011 Dr.Anirban Sengupta

rural areas which attract students from all over India. They are the target customers of organized retailing in this model. In Konkan area, there are chain of stores named “Raigad” in districts and taluka places. The initial fear of local residents that these departmental stores will be unaffordable is no more valid. Most of these companies are giving good performance. Many are using modern technologies like bar code, computers for billing, inventory control, etc. While they have achieved some degree of front-end sophistication as well as back-end efficiency, they may have a long way to catch up with the scale and efficiency level of a city-based organized retailer. This is one model of new face of rural retail in India. These ventures are typically being pioneered by the “sons of the soil”.

But what about large-scale rural chains – is it possible to set up rural retail chains – scalable on a pan-India basis ! As Paddison and Calderwood had pointed out, “rural retailers are disadvantaged due to geographic isolation, unfavorable cost structure and restricted population catchments.” This, along with the fact that modern retail in urban India accounts for only 4-5% of the total retail market and hence has tremendous growth potential – it is unlikely that Urban India players will be keen to set up a retail chain in rural India in the foreseeable future.

It has been observed that this evolution process in...

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