Retail in India

Past

Food retailing in India has found a variety of formats that can be classified as follows:

Haats/bazaars/mandis are typically once or twice a week affairs that are still the lifeline of rural India. This is direct selling in its pristine form, where the actual producer/manufacturer/farmer sells directly to his customers, without any middlemen/distributors in the picture.

The local kirana stores, are usually around 500 to 800 sq ft in size. Omni-present, low-key outlets, they're run by owners/proprietors who know their business well and pass on the knowledge to the next generation. Value proposition is basically convenience. Their success in the respective localities is such that the existence of these stores has been used as an indicator of the real estate potential in that locality.

Mini-supermarkets, are the 'evolved' kirana stores of 1,500 or even 2,000 sq ft. In my view, they are in in-betweens, in search of a true identity in the entire customer service proposition. Knowing that they are bigger than the local stores, they tend to go for over-kill, offering just about everything in terms of product/price range, but unfortunately forget that they do not have the luxury of space to do so. Customers tend to get a slightly better spread in terms of product/brand availability in these outlets.

Disadvantages of kirana stores and super markets:

The huge disparity between the price which the producer gets and the price the consumer pays -- sometimes as high as 10-20 times. The middle man makes the money whereas the producer and the consumer loose heavily.

Co-operative stores are old- timers in this business, with an entirely different business vision. Though extremely low-key they have surprisingly good business volumes with at least two generations of cooperatives co-existing peacefully. For example, there are the Kendriya Bhandar, Sahakari Bhandar, Apna Bazaar and Grahak Peth.

Supermarkets are relatively new entrants in the market. They're the so-called pioneers in organized food retailing and go by the western model in look and feel and format.This is what everybody means, when they say organized food retailing.

Hypermarkets in India are still in the drawing-board stage and most are 'hypermarkets' just because they choose to call themselves so!

Retailing has been around in India for centuries. Even in the so-called organized sector, Nilgiri's, the Chennai-based food store has been around since the early part of the 20th century; Nalli's and Nirula's have been around for about 70 years and Sarvana for about 30 years. Today every town/city has its retail superstars, high street locations and gallis that are a shopper's paradise. While Fashion Street, Linking road, Arsa Shopping, Colaba Causeway, Crossroads, Shopper's Stop, Pantaloons are popular shopping destinations/stores in Mumbai, Delhi has its own Karol Bagh, Palika Bazaar, Ansal's Plaza and the fast developing Gurgaon - Mehrauli Road, Kolkata has Park Street, Airport Road, K C Das and the Eastern Bypass Road, while Puneites would swear by their Main street, Laxmi Road, Kayani and chitale bandhu.

Present & Future

Impact of Retail

India is entering a new phase of consumption-led growth and by the year 2010, the impact of organised retail on the country's growth trajectory will be far more evident not just in the seven major cities but also in small towns and rural India. The total retail consumption in the country is at around $250 billion and macro-economic trends in urbanization, demographic shifts and income growth is expected to push this to $300 billion by 2010.

The $50 billion rise in consumption in five years will provide a major impetus to economic development in the rural and semi-urban economy. What we are witnessing in India is that shoppers spend more on value-added products when they are shopping at modern outlets than they do it in traditional outlets. We have seen this happening in garments, footwear and home products and now we are seeing this happening in food products as well. The biggest beneficiaries of this increased consumption in value-added food products are the farmers in rural India. In more ways than one, rise in consumption in urban India will bring in a positive impact in the life and livelihood of people in rural India. Organised retail will therefore play a much bigger role in rural upliftment than most government policies have.

What does organized retailing do?

Organised retailing aims at providing the following:

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