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Indian Rural Retail Industry- an Overview

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Indian Rural Retail Industry- an Overview International Journal of Scientific & Engineering Research, Volume 5, Issue 12, December-2014 75 ISSN 2229-5518 Indian Rural Retail Industry- An overview Dr. Suman Yadav-Associate Professor, BIET, Jhansi [email protected] Gajendra Kumar Gupta- Assistant Professor,Surya College of Business Management, Lucknow Mail- [email protected] by 2030, India may become one of the Top 5 economies in Abstract— India is a huge market composed of maximum terms of GDP. Presently, the Indian retail industry is in a population of youth. Indian Retail sector is growing very highly unorganized state. The organized retailing share in the rapidly. Retail is an emerging sector in India. The country’s total retail volume has been below double digits in India as dynamic retail landscape presents a grand opportunity to compared to 20% in China, 25% in Indonesia, 35% in investors from across the globe, to use India as a strategic Philippines, 40% in Thailand and 50% in Malaysia, around business hub. Marketers need new strategies to exploit Indian 80% in US and 70 % in Europe while as in Asia on the whole rural market. There is need of innovative ideas to capture the it comes to around 20%. Several agencies have projected market. Now marketers are shifting their focus to rural retail different estimates of Indian retail volume both for organized as it offers huge potential which can be tapped effectively and unorganized sectors. The Technopak Advisors have also through innovative distribution channels with retailing being estimated that the country's retail market accounted for US$ the most critical element. The concept of rural malls is 310 Bn in 2006 , estimated to touch US$ 420 Bn in 2011 and becoming popular. Famished of modern forms of may reach the levels of US$ 675 Bn in 2016 at CAGR of 7.5 entertainment, the rural middle class have greeted these malls % and 620 billion Euros (around Rs 37 lakh crore) by 2020. with great passion. Despite being visibly a huge green pasture The organized retail market which was estimated at US$ 10 this rural retail sector penetration offers several bottlenecks Bn during 2006 and US$ 26 Bn for 2011 may grow to US$ 84 which include rural infrastructure, life styles and varied Bn by 2016, at CAGR of 26%. Talwar (2010) has also perceptions of rural consumers. Only those companies who projected India’s overall retail sector to US$ 833 Bn by 2013 understand that there is no short cut to seize rural markets and and to US$ 1.3 trillion by 2018, at a compound annual growth frame their strategies altogether different from metros are rate (CAGR) of 10%. The modern retail segment in India has likely to tap this resource. Indian rural market has different accelerated its growth rate since 2007 as the major global quality people as compared to urban market. The objective of players and Indian corporate houses were seen entering the this paper is to study the present scenario of rural retailing, fray in a big way. Organized retailing in small-town India is noteworthy rural initiatives of the marketers, problems and already growing at over 50-60 per cent a year, compared to myths and find a solution of Indian rural retailing. Further, it 35-40 per cent growth in the large cities. About 200 tier-III also highlights the strategiesIJSER the marketers need to lay focus cities with population of less than 2 million and another 500 on before entering this segment. Indian rural market has great rural towns have the potential to be the hub for rural markets. potential to exploit it. India’s retail markets offer tremendous opportunities with almost half of it shared by rural India. According to National KEYWORDS Council of Applied Economic Research (NCAER) reports, Rural Infrastructure, Rural market, retail, Rural Retail Outlets. rural India is home to 720 million consumers across 627,000 villages. Seventeen per cent of these villages account for 50 INTRODUCTION per cent of the rural population as well as 60 per cent of rural The Retail Industry in India is emerging as a one of the largest wealth. This implies that reaching out to just 100,000 plus industries estimated to account for more than 10 per cent of villages will ensure access to most of the rural opportunity. the country’s GDP and around 8 per cent of the employment. India's rural retail market was expected to grow by 29 percent As a highly dynamic and fast growing industry undergoing a to 1.8 trillion rupees (US$ 45.34 Bn) by 2010.. Global major shake-up it is heading towards next boom industry. consulting firm McKinssey and Co. has projected that India’s India has already weathered the earlier economic recession rural market would touch US $ 500 Bn by 2020. Rural and it’s after effects faced by many developed and established markets emerge as a huge opportunity for retailers as is economies and on all counts may come out of the present slow reflected in the share across most categories of consumption. down also successfully. As a ‘Vibrant Economy’, India topped While these estimates appear to have been arrived at taking A T Kearney’s list of emerging markets for retail investments literacy, accessibility, degree of penetration, increasing for three consecutive years and stood 2nd fastest growing income levels, distance from major commercial and business economy in the world, the 3rd largest economy in terms of hubs, brand awareness, and concepts of quality increasing GDP in the next 5 years and the 4th largest economy in PPP consumerism among middle class in rural areas yet these do terms. After USA, China & Japan India is rated among the top not necessarily indicate a green pasture in rural India as more 10 FDI destinations. Currently, as a fastest growing economy than 45000 villages continue to remain uninhabited besides about 2.20 Lakh villages having a population of less than 500 Institute for Metals, Tsukuba, Japan (e-mail: [email protected]). souls continue to be without effective/functional retail sales IJSER © 2014 http://www.ijser.org International Journal of Scientific & Engineering Research, Volume 5, Issue 12, December-2014 76 ISSN 2229-5518 outlets. 29% of our population (2001 census) falling below even at other times, the company is offering a slew of other poverty level with increasing levels of retail prices form other goodies like a bank, a cafeteria and many others. ITC has tied gray areas require due considered before making an optimistic up with agri-institutes to offer farmer training programmes. estimation. With the changing face of country’s dynamic retail Then, plots of land have been earmarked to display large landscape the Indian consumer is in for a rapid transformation. agricultural machinery like threshers. Other parcels of land Corporate bigwigs such as Reliance, AV Birla, Tata, Godrej, have been earmarked for pesticide and fertilizer companies for Bharti, Mahindra, ITC, RPG, Pantaloon, Raheja and Wadia demonstrating their products. The e-Choupal initiative was Group are expected to invest close to Rs.1 trillion in the launched in 2000 and by 2007 it had its presence 6,500 e- business of retail over the next five years. Reliance Retail is Choupals empowering four from risks of reversal in investing Rs.30, 000 crore in setting up multiple retail formats Government's agri reforms. The company is in the process of backed by a 68-strong distribution network, with expected rolling out e-Choupal's Version 3.0, under which it plans to sales of over Rs.100,000 crore by 2010. The Future Group’s offer personalised crop management advisory services to Pantaloon Retail and RPG’s Spencer’s are also going all out to individual farmers. The company is gearing up e-Choupals as maintain their dominant position on India’s retail horizon. The rural employment exchanges, which will connect the rural Lifestyle India, Indiabulls, Wadhawan Group, Vishal Retail, youth with jobs through its‘Rozgaarduniya' initiative petroleum majors IOCL, BPCL & HPCL, and others are according to Mr Sivakumar Chief Executive-Agri Businesses, firming up more and more ambitious retail expansion plans by ITC Ltd. ITC also started piloting Choupal Fresh in the day. While global retailers Metro AG and Shoprite Hyderabad a year ago, it was a model to deliver fresh fruits Holdings increase their presence on the Indian retail and vegetables to consumers and institutions based on landscape, the Bharti – Wal-mart combine is scouting demand. Whatever is produced, gets consumed. It has worked locations for their joint retail venture. The recent tie-up well in Hyderabad, million farmers in 40,000 villages. between Tata and Tesco further adds to the action in retail. However, in 2007, Government re-imposed restrictions on Modernising retail will see some 15 million people engaged in commodity sourcing. So further expansion of eChoupals came retail and retail support activities by 2010 – including front to a halt. A virtual freeze on the expansion of e-Choupals end retail operations, supply chain, logistics, process & since 2007 seems to have encouraged ITC to discover new infrastructure development and supplies. (Source: Assocham anchor businesses to insulate its existing e-Choupal model and conference on Re-inventing retail in New Delhi on 26th garner additional sources of revenues.ITC plans to broad-base September2008,(www.assocham.org/events/recent/event_271/ the e-Choupal model to discover new anchor businesses to vikas_visal.pdf.) insulate its existing e-Choupal model MAJOR RURAL RETAILING INITIATIVES AND TATA KISAN SANSAR (TKS) THEIR UNIQUE SHOPPING EXPERIENCE Tata Chemicals and Rallis India, the two companies under the The concept of rural malls, which was first introduced by ITC, $29 billion Tata Group undertook two separate ventured till is proving to be an effective distribution strategy in rural 2003.
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