India’s Retail Tale

Walking into those big Walmart and Sam’s Club stores in Los Angeles, I used to wonder when similar shops would open here in India. That was back in 2005. In 3 years from then, that is now, in 2008, India seems to have been bitten by that same retail bug!

It started with the Big Bazaar ‘boom’. And today it has spread far beyond just ‘one retail’ chain – now we have the Reliance chains (Reliance Trendz, Reliance Digital, Reliance Fresh), Big Apple, Sabka Bazaar, Jumbo Electronics to name a few. And this is just the tip of the iceberg.

Today when we think of ‘retail’, we generally think of only our ‘big’ stores. Most people don’t really understand what exactly retail is all about. The definition of ‘retail’ is ‘the sale of goods to ultimate consumers, usually in small quantities’. Think carefully about it, even the neighborhood store, yes that store you call up for ‘free home delivery’, is a form of retail. In fact, that is where retail actually began in India. Now India is all set in to head for a big boom in retail. With all the biggies in India (Future Group, Tata, Reliance etc.) trying to bag their share of the market in this upcoming industry, India is in for some tough competition in this line.

India is the fifth largest retail destination in the world! She has the largest number of retail outlets worldwide. For an approximate idea, we have about 12 million retail outlets in our country. And as I said earlier, retail includes the small neighborhood grocery stores as well as the large stores like Big Bazaar. In fact the organized retail business in India is estimated to be growing at almost 50 per cent per year! This can be seen by the turnover generated by the industry, US$ 17 billion in 2006-07 and US$ 26 billion in 2007-08.

Retail is also of different kinds. We have the ‘independent retailer’, who mainly starts the whole business himself, and most of the neighborhood stores would fall under this category. Then there is the ‘existing retail business’ which is basically inherited business. Then there are ‘franchisees’ (like McDonalds, and Pizza huts), ‘dealership’ (the auto showrooms for example), and ‘network marketing’ (like Oriflame or Avon). Retail can also be divided into the types of items sold by the retailer. I am sure most of you must have been quite surprised reading that Mc Donald’s and Pizza Hut come under retail. Well yes they do! They also sell items to consumers. Retail includes all kinds of stores right from the grocery ones to clothes, from automobiles to medicines, from cosmetics to toys. Almost 5 million out of those 12 million, mentioned earlier, are related to the food and beverages section.

The only drawback that India faces is that she lacks the infrastructure. Not just the material infrastructure, but also the intellectual infrastructure. Today people in our country are not yet used to the ‘organized retail’ mentality. There are very few people here today who would do an MBA in retail marketing, and even worse, there are very few courses offered for this field. IILM, SCDL, IRS are few institutes which offer courses in Retail Management, but of course they have limited seats. Due to this dearth of manpower, retail chains today are pulling in people from other sources – like consumer electronics or from foreign companies. However, with steady growth in the economic sphere, all these problems should get countered soon!

Priya Ganguli

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