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The Indian retail sector is ready to take on challenges
from global retail players such as Wal-mart and Carrefour because unlike them,
they have a better understanding of the Indian consumer’s psyche. Ultimately, a
successful retailer is one who understands his customer. The Indian customer is
looking for an emotional connection, a sense of belonging. Hence, to be
successful any retail outlet has to be localized. The customer should feel that
it is a part of his culture, his perceived values, and does not try to impose
alien values or concepts on him. Indian customer is not keen to buy something
just because it is sold by an international company. Ultimately, it boils down
to how much localization and adaptation the company is willing to do for India. Other
than tremendous money power, global companies have nothing extra or special
that the Indian retail business does not have. We live in exciting times. Only
two percent of India’s
retail market is organized. The future shows tremendous potential for growth in
the retail sector. Almost all large companies worldwide are looking to
establish a base or stake in the Indian market. In this scenario, the Indian
retail sector itself must seize the initiative to realize the dreams of
contributing to a prosperous and booming economy. The focus should be on the
Indian horizon before looking for retail opportunities in other countries
because India
itself is a big retail market. In the near future India will see a phenomenal growth
of shopping malls and specialty retail stores. The specialty stores will cater
for home, electronics, furniture, watches, sunglasses and assorted items. There
will be more fashion stores for youth. Specialty retail stores and malls are
the future of Indian retail market.
Traditionally retailing in India
can be traced to the emergence of the neighborhood ‘Kirana’ stores catering to
the convenience of the consumers, an era of government support for rural
retail: Indigenous franchise model of store chains run by Khadi & Village
Industries Commission, 1980s experienced slow change as India began to
open up economy. Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and Grasim first saw the emergence of retail
chains. Later Titan successfully created an organized retailing concept and
established a series of showrooms for its premium watches. The latter half of
the 1990s saw a fresh wave of entrants with a shift from Manufactures to Pure
Retailers. For example, Food World, Subhiksha and Nilgiris in food and FMCG;
Planet M and Music World in music; Crossword and Fountainhead in books. Post
1995 onwards saw an emergence of shopping centers, mainly in urban areas, with
facilities like car parking targeted to provide a complete destination
experience for all segments of society. Emergence of hyper and super markets
trying to provide customer with 3 V’s - Value, Variety and Volume. Expanding
target consumer segment: The Sachet revolution - example of reaching to
the bottom of the pyramid.
There are various challenges which the organized retail industry in India faces.
These are:
1. The organized retail industry is facing stiff
challenge from the unorganized sector. Traditional retailing has been deep
rooted in India
for the past few centuries and enjoys the benefits of low cost structure,
mostly owner-operated, therein resulting in less labor costs and little or no
taxes to pay. Consumer familiarity with the traditional formats for generations
is the greatest advantage to the un-organized sector.
2. Another challenge facing the Indian organized
retail sector is the lack of retail space. With real estate prices escalating
due to increase in demand from the Indian organized retail sector, it is posing
a challenge to its growth. 3. Trained manpower shortage is a challenge
facing the organized retail sector in India
4. The Indian government has allowed 51% foreign
direct investment (FDI) in the India
retail sector to one brand shops only. This has made the entry of global retail
giants to organized retail sector in India difficult.
Well these are the few challenges faced by the Organized
Retail sector in India
but one thing which is sure in here is that, this sector is going to outshine
in near future.