Factors determining the growth of Retailing in India

 Factors determining the growth of Retailing in India

The major factors responsible for the growth of organised retailing in India are as follows:

Organised retailing is a recent development. It is the outcome of socioeconomic factors. India is standing on the threshold of a retail revolution.

The retail Industry is one of the fastest-changing and most vibrant industries that, has contributed to the economic growth of our country. Within a very short period, the Indian retail industry has become the most attractive, emerging retail market in the world.

Healthy economic growth, changing demographic profiles, increasing disposable incomes, and changing consumer tastes and preferences are some of the key factors that are driving growth in the organised retail market in India.

Some of the factors responsible for the growth of organised retailing are as under:

1. Growth of middle-class consumers: In India the number of middle-class consumers is growing rapidly. Rising consumer demand and greater disposable income have allowed the retail industry to grow and prosper. They expect quality products at decent prices. Modern retailers offer a wide range of products and value-added services to customers. Hence this has resulted in the growth of organised retailing in India.

2. Increase in the number of working women: Today urban women are literate and qualified. They have to maintain a balance between home and work. The purchasing habit of working women is different from the homemaker. They do not have sufficient time for leisure and they expect everything under one roof. They prefer one-stop shopping Modern retail outlets therefore offer one-store retailing.

3. Value for money: Organised retail deals in high volume and can enjoy

economies of large-scale production and distribution. They eliminate intermediaries in

the distribution channel. Organised retailers offer quality products at reasonable prices. Example: Big Bazaar and Subhiksha. Opportunity for profit attracts more and more new business groups for

entering into this sector.

4. Emerging rural market: Today the rural market in India is facing stiff competition

in the retail sector also. The rural market in India is fast emerging as rural consumers

are becoming quality-conscious.

Thus due to the huge potential of rural retailing organised retailers are developing new

products and strategies to satisfy and serve rural customers. In India, the Retail industry is

proving the country’s largest source of employment after agriculture, which has the

deepest penetration into rural India.

5. Entry of corporate sector: Large business tycoons such as Tata, Birla, and

Reliance etc. has entered the retail sector. They are in a position to provide quality

products and entertainment.

As the corporate – the Piramals, the Tatas, the Rahejas, ITC, S.Kumar’s, RPG

Enterprises, and mega-retailers- Crosswords, Shopper’s Stop, and Pantaloons race to

revolutionize the retailing sector.

6. Entry of foreign retailers: Indian retail sector is catching the interest of foreign

retailers. Due to liberalisation multinationals have entered our country through joint

ventures and franchising. This further is responsible for boosting organised retailing.

7. Technological impact: Technology is one of the dynamic factors responsible for the

growth of organised retailing. The introduction of computerization, electronic media and

marketing information systems has changed the face of retailing. Organized retailing

in India has a huge scope because of the vast market and the growing consciousness

of the consumer about product quality and services.

One of the major technological innovations in organised retailing has been the

introduction of Bar Codes. With the increasing use of technology and innovation

retailers are selling their products online with the help of the Internet.

8. Rise in income: Increase in the literacy level has resulted in the growth of income

among the population. Such growth has taken place not only in the cities but also in

towns and remote areas.

As a result, the increase in income has led to an increase in demand for better-quality

consumer goods. Rising income levels and education have contributed to the conveniences. 

 Rise of consumerism: With the emergence of consumerism, the retailer faces a more knowledgeable and demanding consumer. As the business exists to satisfy consumer needs, the growing consumer expectation has forced retail organizations to change their format of retail trade. Consumer demand, convenience, comfort, time, location etc. are the important factors for the growth of organised retailing in India. The retail industry is divided into organised and unorganised sectors.

 

Organised retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. 

Un-organised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner-manned general stores, paan/beedi shops, convenience stores, hand carts and pavement vendors. 

It is important to understand how retailing works in our economy, and what role it plays in the lives of its citizens, from a social as well as an economic perspective. India still predominantly houses the traditional formats of retailing, that is, the local Kirana shop, paan/beedi shop, hardware stores, weekly haats, convenience stores, and bazaars, which together form the bulk. Retailing involves a direct interface with the customer and the coordination of business activities from end to end right from the concept or design stage of a product or offering, to its delivery and post-delivery service to the customer. The industry has contributed to the economic growth of many countries and is undoubtedly one of the fastest-changing and dynamic industries in the world today.

 

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