The Indian retail sector has improved since the country adopted the policy
of liberalization and opened its gates to the world. The term `organized retail' in
India, became the buzzword. Not very long ago, in the metros and tier II cities of India,
Reliance Fresh launched its stores with the promise of not only fresh and hygienic produce of
fruits, vegetables and other frozen food, but also a format that made shopping a
pleasurable routine. The retail stores offering an assortment of products (food and grocery) was
not only well accepted by customers, it also became a way of life. The opportunity for
catering to the most sizable population of the world lay open to all the prominent business
houses and there was mushrooming of various stores like More, Spencer's, Subhiksha, Hyper
City, etc. The opportunity also generated interest of global giants of organized retail
like Walmart, Tesco and Carrefour.
The economy of India is growing at the rate of over 6.7% per annum and this is a
positive indicator for growth in the retail sector. The economic growth, credit boom
and demographic transition make the sector lucrative, as the disposable income of
consumers has increased in the recent times. A recent survey has placed India on the
3rd position in the entire Asia-Pacific region in terms of retail revenue, next only to Japan and
China. According to the retail and fashion research firm, Images Multimedia, India's
organized retail market has the potential to reach $45 bn by
2010.The opportunity in food retail in particular, is enormous and promises momentous growth in future. There has been
a phenomenal growth in the organized retail sector. Retailing makes a
significant contribution of 10% to the Gross Domestic Product (GDP) and 6.7% to employment
and has been ranked first in terms of attracting investment according to Kearney's
Global Retail Development Index for 2007 (Deepika and Vishnoi, 2007). A combination
of private and public investments in recent years, as well as steady liberalization
of regulations has created a situation that is unique in India's history as an
independent country, where business growth has led to individual prosperity, which is in turn,
leading to explosive growth of further business
opportunities.Also, according to Kearney
report (2004), India has been recognized as the `second most attractive retail destination' in
the world among the upcoming markets. A study conducted by Mishra and Dash (2008)
on Indian consumers indicates vast changes that have taken place in the retail scenario.
They remark that organized retail is spreading in India at a very fast pace and has had an
impact on the consumer society. The study is based on the fact that retailing (organized) has
come up as one of the most dynamic sectors of the Indian Economy and the past one
decade has seen a change in the traditional retailing structure due to the spread of
organized retail. The market today is divided between conventional and modern (organized)
formats with the arrival of Indian as well as international companies. Talwar (2008), in an
exclusive analysis of report findings of survey conducted on stores like Subhiksha, More,
Reliance Fresh, 6 Ten, Local Kirana and Spencer's concludes that there is a very lucrative segment
of food and grocery existing in the organized retail sector. The issue of concern is that till
date none of the retail chains have managed to break-even in this business. The study
suggests that the organized players are bullish enough to sustain themselves and continue
expanding. |
