Paper ID: 13180243 ISSN: 2395-5929 UGC Jr. No. 45308 | IFS – 2018: 1.14 | SJIF 2016: 3.343 | SJIF 2017: 4.253 | ISI 2017-2018: 0.673 RETAIL SECTOR IN INDIA – PRESENT SCENARIO AND CHALLENGES Dr. J.LALITHA Associate Professor and Research Supervisor, P.G.and Research Department of Commerce, Periyar EVR College (Autonomous), Tiruchirappalli-23. C.CHARLES CELESTINA Ph.D .Part Time Research Scholar, PG and Research Department of Commerce, Periyar EVR College (Autonomous), Tiruchirappalli-23. Abstract The Indian Retail Industry is one of the top five retail industries in the world and in retail; India offers immense scope for growth and opportunities. The change of attitudes of Indian consumers and the emergence of organized retail formats have transformed the face of retailing. Organized retailing offers huge potential for future growth of retailing in India. The phenomenal growth of retail in India is reflected in the rapid increase in number of supermarkets, departmental stores, and hypermarkets in the country. This paper provides information about the growth of retailing, current trends in retailing, strength and opportunities of retail stores, factors which influence the retail industry for rapid development and the details of major players of retailers. It also focuses on the challenges faced by them in India. Keywords: Organized retailing, Growth, Customer services, Challenges and Opportunities. I. INTRODUCTION Retailing is one of the largest sectors in the global economy. In modern days the growth of retailing is moving at a rapid speed. With the increasing demand of the customers spurred by changing trends, aspiring needs for variety, high and growing domestic consumption are the factors which are responsible for the growth of Indian Retail sector. An important contributing factor for the growth of India‟s retail sector is growing middle class which is expected to increase from 21 million households in 2014 to 91 million households in 2030. It expects that 570 million people who live in cities in 2030 may be nearly twice the population of the United States. The size of the Indian retail market in 2010 was at 353 billion USD, in 2014 it was 500 billion USD and by 2020 it will be 1.3 trillion USD. Over 20 percent of India‟s Gross Domestic Product (GDP) is contributed by retail sector and in total employment it contributes eight percent. The Retail industry in India has come forth as one of the most dynamic and fast paced industries in which several players are entering the market. Indian Retail industry, the industry which stands in terms of employment generation is undoubtedly characterized by the widely dispersed retail outlets which are situated at every nook and corner whether it is in urban or rural areas. The important macroeconomic factor which influences the expansion of modern retail is increasing opportunity of non-agricultural employment for rural youth and a better quality of living for the existing agricultural society. Once the individual is observed in retail operations, they can access more equitable wages and benefits. These changes may make for the development of Emperor International Journal of Finance and Management Research [EIJFMR] Page 287
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Paper ID: 13180243 ISSN: 2395-5929 UGC Jr. No. 45308 | IFS – 2018: 1.14 | SJIF 2016: 3.343 | SJIF 2017: 4.253 | ISI 2017-2018: 0.673
RETAIL SECTOR IN INDIA – PRESENT
SCENARIO AND CHALLENGES Dr. J.LALITHA
Associate Professor and Research Supervisor,
P.G.and Research Department of Commerce,
Periyar EVR College (Autonomous),
Tiruchirappalli-23.
C.CHARLES CELESTINA Ph.D .Part Time Research Scholar,
PG and Research Department of Commerce,
Periyar EVR College (Autonomous),
Tiruchirappalli-23.
Abstract
The Indian Retail Industry is one of the top
five retail industries in the world and in retail;
India offers immense scope for growth and
opportunities. The change of attitudes of Indian
consumers and the emergence of organized retail
formats have transformed the face of retailing.
Organized retailing offers huge potential for future
growth of retailing in India. The phenomenal
growth of retail in India is reflected in the rapid
increase in number of supermarkets, departmental
stores, and hypermarkets in the country. This paper
provides information about the growth of retailing,
current trends in retailing, strength and
opportunities of retail stores, factors which
influence the retail industry for rapid development
and the details of major players of retailers. It also
focuses on the challenges faced by them in India.
Keywords: Organized retailing, Growth, Customer
services, Challenges and Opportunities.
I. INTRODUCTION
Retailing is one of the largest sectors in the
global economy. In modern days the growth of
retailing is moving at a rapid speed. With the
increasing demand of the customers spurred by
changing trends, aspiring needs for variety, high
and growing domestic consumption are the factors
which are responsible for the growth of Indian
Retail sector. An important contributing factor for
the growth of India‟s retail sector is growing
middle class which is expected to increase from 21
million households in 2014 to 91 million
households in 2030. It expects that 570 million
people who live in cities in 2030 may be nearly
twice the population of the United States.
The size of the Indian retail market in 2010
was at 353 billion USD, in 2014 it was 500 billion
USD and by 2020 it will be 1.3 trillion USD. Over
20 percent of India‟s Gross Domestic Product
(GDP) is contributed by retail sector and in total
employment it contributes eight percent. The
Retail industry in India has come forth as one of the
most dynamic and fast paced industries in which
several players are entering the market. Indian
Retail industry, the industry which stands in terms
of employment generation is undoubtedly
characterized by the widely dispersed retail outlets
which are situated at every nook and corner
whether it is in urban or rural areas.
The important macroeconomic factor which
influences the expansion of modern retail is
increasing opportunity of non-agricultural
employment for rural youth and a better quality of
living for the existing agricultural society. Once
the individual is observed in retail operations, they
can access more equitable wages and benefits.
These changes may make for the development of
Emperor International Journal of Finance and Management Research [EIJFMR] Page 287
Paper ID: 13180243 ISSN: 2395-5929 UGC Jr. No. 45308 | IFS – 2018: 1.14 | SJIF 2016: 3.343 | SJIF 2017: 4.253 | ISI 2017-2018: 0.673
retail stores by supplying tremendous amount of
goods and services to the customers. In India the
vast middle class and countless number of retail
stores are the key attractive forces for global retail
giants wanting to enter into newer markets, which
in turn will help the Indian retail industry to grow
faster.
Review of literature
A report titled, “ Indian Retail Industry:
Challenges, opportunities and outlook:” (2009)
published by Dun & Bradstreet, the world‟s
leading source of global business information
describes the Global Retail Scenario, Evolution of
organized retail, Size of the Indian retail industry,
Industry Segmentation and Regulatory framework.
The report published by Delloite titled,
“Indian Retail Market embracing a new trajectory”
2011 covers - the size and trends in retail sector,
FDI into retail, market opportunities, tax and
regulatory structure, analysis etc. The report states
that although all the retail segments offer growth
opportunity in terms of potential market size and
scalability is grocery retailing, particularly for the
supermarket and hypermarket formats.
II. OBJECTIVES
1. To study the growth and development of
organized retail industry in India.
2. To know the major players of organized
retailers and the factors which influence the
growth of retail sector.
3. To understand the challenges faced by the
organized retail sector in India.
Methodology
The present study is based on Secondary
Data and information is collected from a variety of
sources which include books, journals, periodicals
publication of various retail organisation and
websites of retail sectors.
Reasons for the Growth of Retail Market
The retail sector in India is emerging as one of the
largest sectors in the economy.
The total market size was estimated to be
around US$ 672 billion in 2016, thereby
registering a CAGR of 7.74 per cent since
2000.
India will become a favourable market for
fashion retailers on the back of a large young
adult consumer base, increasing disposable
incomes and relaxed FDI norms.
It is clear from the following diagram
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Paper ID: 13180243 ISSN: 2395-5929 UGC Jr. No. 45308 | IFS – 2018: 1.14 | SJIF 2016: 3.343 | SJIF 2017: 4.253 | ISI 2017-2018: 0.673
CAGR –Compound Annual Growth Rate.
Source: Ernst & Young, Price Waterhouse Cooper,
Economic Times, TechSci Research
The retail industry is growing at a faster rate.
Retail industry is expected to grow to US$ 1.3
Trillion by 2020. It is clear from the following diagram
Source: BCG Retail 2020, Ernst and Young, Deloitte, indiaretailing.com, Economist Intelligence Unit, Euro monitor.
Food & Grocery Account For Largest Share in
Revenues in India
By 2020, food &grocery segment is expected
to account for 66 per cent of the total revenues
in the retail sector, followed by apparel
segment.
Source: Technopak, Indian Retail Market, Deloitte.
204
238
278
321
368
424 51
8
49
0
53
4
60
0
67
2
1,3
00
200
400
600
800
1,000
1,200
1,400
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
13
20
14
20
15
20
16
20
20
E
Market Size over the past few years (US$ billion)
0
CAGR
1.25
60
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Significant Global Positioning of Indian Retail
Sector
India is among the highest in the world in
terms of per capita retail store availability.
India‟s strong growth fundamentals, along
with increased urbanisation and consumerism,
offer immense scope for retail expansion for
foreign players.
With the allowance of 100 per cent FDI in
single brand retail investor sentiment will get
further push.
Rapid emergence of organised retail outlets,
such as mega malls and hypermarkets, are
augmenting the growth of organised retail in
the country. Retailers have made dynamic
changes in supply chain and logistics for
competitive advantage and meeting consumer
demands.
In June 2016, Amazon has announced to invest
an additional USD3 billion in India operations,
thereby reaching investment to over US$ 5
billion.
In 2016, Amazon witnessed growth of 160 per
cent in the seller base, over 2015, and attracted
1, 40,000 sellers in India.
In May 2016, Aditya Birla Fashion and Retail
Limited (ABFRL) announced to acquire
exclusive online and offline rights of Forever
21,an American fast fashion brand, in the
Indian market.
In October 2016, CapitaLand, a listed company
in Singapore, announced plans to open two
more malls in India by the end of 2019.
World‟s largest private equity manager,
Blackstone Group, entered India‟s retailing
sector by setting up a fully owned subsidiary,
Nexus Malls. The new entity will own and
manage shopping centres in the country.
Diageo, world‟s largest spirits maker opened a
new business services centre in Bengaluru and
gave employment to 1,000 people, in 2017.
British brand „Marks & Spencer‟ (M&S) plans
to open 10 new stores annually, under its joint
venture business with Reliance Retail in India.
Source: Dun and Bradsheet, AT Kearney, Indian
Retail Market, Times of India, TechSci Analysis
Factors Which Influence the Demand for Organised Retail
Dem
an
d
Fa
cto
rs
Higher brand consciousness Rising incomes and purchasing power
Growing aspiration levels and appetite to
spend
Credit availability
Growing young population and working
women
Changing consumer preferences and growing
urbanisation
Indian retail opportunity
Su
pp
ly
Fa
cto
rs Rapid real estate and infrastructure
development
Easy availability of credit
Emergence of new categories Expansion plans of existing players
Development of supply chain improving
efficiency
R&D, innovation and new product development
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Ample Growth Opportunities in Indian Retail Industry
Source: Aranca Research
Major Players in Indian Organised Retailing
Major Players
Tata Group - Store Brands (Products)
Landmark (Books and music), Chroma
(Multi Brand Electronics), World of titan
(Watches), Tannish (Jewellery),Titan Eye + (Eye
wear), Westside (life style retail store), Star Bazaar
(Hyper market Chain), Fashion Yare (family
fashion store).
Future Groups: Store Brands (Products)
Central (Shopping Mall), Big Bazaar
(Hyper Market), Pantaloons (fashion outlet), Blue
Sky (Sun glasses), Brand Factory (Multi Brand
readymade Garments), KB‟s Fair Price (Essential
Products), Furniture Bazaar (Home furniture),
Collections (Lifestyle furniture), Gen M & One
Mobile (Mobile phones), M.Fort (Electronics) Shoe
Factory (footwear) and Depot (Books and Music).
Reliance Group: Store Brands (Products)
Reliance Fresh (neighbourhood store),
Reliance Mart (Super market), Reliance super
(mini mart),Reliance digital (Consumer durables
and information technology), Reliance Trends
(Apparel and accessories), Reliance wellness
(health, wellness and beauty), Reliance footprint
(footwear), Reliance Jewels (Jewellery), Reliance
Time out (Books, Music and Entertainment),
Reliance auto zone (Auto Mobile Products and
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service), Reliance Living (home wear, furniture,
modular kitchen and furnishings).
RPG Group: Store Brands (Products)
Spencer‟s (multi –format retail store), Music
world (music and home video store) and Books &
Beyond (Book Store).
K.Raheja Group: Store Brands (Products)
Shoppers Stop (Clothing, accessories,
fragrances, cosmetics, footwear and home
furnishing store),. Crossword (Book Stores) and
Hyper city.
Challenges for the Retail Sector In India
The Indian Retail Industry is emerged as the
most dynamic and fast-paced industry. It accounts
for over 8 present employment and around 10
present of India‟s GDP. The Indian Retail Market
is expected to nearly double by 2029 from 2015.
Though the retail industry is growing at a rapid
speed, it has to face some challenges. They are as
follows.
Indian Consumer
A decade ago, the Indian consumer used
to save most of his income and purchase the bare
necessities. The Indian consumer was satisfied
with only necessary requirements. There was no
place for unnecessary needs and luxuries. But that
time has gone. The Indian consumer has gone
through a remarkable transformation. And now the
consumer is armed with higher income, credit
cards, desire to improve the standard of living and
exposure to the shopping culture of the west.
Multiple malls, supermarkets and organized retail
with a variety of products are fuelling the needs of
the Indian Consumer.
Young Shoppers
India has a young population and it‟s very
large in number. The internet and television have
made an impact on the mentality of young
consumers. The generation is earning money at a
very young age, and other avenues of employment
that cater to students in college and schools. As a
result, they are ready to spend most of their income
on apparel, electronics, and accessories.
Higher Incomes
A number of employment opportunities
have emerged due to liberalization. Job prospects in
the country are looking up because of the
expansion of domestic corporations and entry of a
number of multinationals. As a result,
consumption and income are projected to increase
quickly over the upcoming year that sets the stage
for promising and exciting retail market in the
future in the country.
Urbanization
The biggest challenge facing the Indian
organized retail sector is 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.
Manpower Shortage
Trained manpower shortage is a challenge
which is a crucial issue for the organized retail
sector in India. The Indian retailers have difficulty
in finding trained person and also have to pay more
in order to retain them. This again brings down the
Indian retailers profit levels.
Challenges with Infrastructure and Logistics
The lack of proper infrastructure and
distribution channels in the country results in
inefficient processes. This is a major hindrance for
retailers as a non-efficient distribution channel is
very difficult to handle and can result in huge
losses. Infrastructure does not have a strong base
in India. Urbanization and globalization are
compelling companies to develop infrastructure
facilities. To fully utilize India‟s potential in retail
sector; these major obstacles have to be removed.
Supply Chain Management
The retail scenario is characterized by
logistical challenges, constant changes in consumer
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preferences and evolution of new retail formats.
All this increases the challenges faced by the
industry. Various strategies are to be implemented
to improve core business processes, such as
logistics, innovation, transparency, distribution and
inventory, management of Point of Sale (POS)
data.
Frauds in Retail
It is one of the primary challenges the
companies would have to face. Frauds, including
vendor frauds, thefts, shoplifting and inaccuracy in
supervision and administration are the challenges
that are difficult to handle. This is so even after the
use of security techniques, such as CCTVs and
POS systems. As the size of the sector would
increase, there is a possibility for the number of
thefts, frauds and discrepancies in the system.
Dominance of Unorganized Sector
Unorganized retail is characterized by
Family – run stores,
Lack of best practices when it comes to
inventory control and supply chain
management,
Lack of standardization and
Essentially a sector populated by anyone who
has something to sell.
Cultural and regional differences
India‟s retail sector is highly segregated by
geography. In recent years the Western and
Southern areas of India have developed and more
retailers have expanded their stores to these two
regions. Historically, most organized retail has
been concentrated in Southern India due to better
distribution technology, cheaper real estate, and a
greater degree of Western influence in the region.
Importantly, the Southern region offers more
organized transportation systems and cold storage
facilities. This infrastructure provides reliable
delivery and minimizes product deterioration and
damage. As a result, modern retail began here and
it continues to be one of the leading regions for
organized retail. Residents in the West receive the
highest level of education and are well travelled
(Internationally) as compared to other regions.
Mumbai, one of the major cities and the financial
capital of India, is located in West India.
International retailing:
International Retailing and branding has
been one of the sectors that is seeing exponential
growth. With increase in standard of living and
disposable income, people in developing countries
are getting exposed to international brands. Rise of
internet and multi-media has further provided
impetus to the dream of people to aspire for
branded consumer goods. Along with the rising
awareness and aspirations of the people, the
opening up of economies and foreign direct
investment opportunities has fuelled the growth of
international retailing business.
Presence of Variety of Products:
The product categories largely comprise of
fashion clothes, food, gadgets as well as personal
and luxury products. Each country and each market
is characterized by different fashion trends and
consumer behaviour. While the products are fast
moving and have very short life, the local culture
and outlook has a large part to play in the
localization of the international brands in domestic
markets.
Products Innovation:
Product innovation and product mix happen
to be the biggest challenges for these companies
both at global as well as at domestic levels. The
survival and growth of the brand is directly
dependent upon these challenges. The global
retailers have to be tuned into the international as
well as domestic product according to the fashion
prevailed in each of the countries and get their
product mix right for each of the markets. Service
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quality and merchandising methods too, play an
important role in the brand visibility and reputation.
Pricing:
Pricing of products is yet another challenge
faced by the brands. Developing and emerging
markets are highly price sensitive. When the brands
are trying to make an entry into the new markets,
they have to consider the price sensitivity and
profitability as well.
Political Issues:
The retailing business is high volume
business. To be a successful brand, the Companies
have to adapt the right strategies, be aware of the
local cultural as well as political environment in the
market and more importantly manage the brand
promotion and supply chain perfectly.
Other factors
Regulations restricting real estate purchases
and cumbersome local laws.
Absence of developed supply chain and
integrated IT Management.
Low skill level for retailing management.
Intrinsic complexity of retailing – rapid price
changes, constant threat of product
obsolescence and low margins.
Multiplicity and complexity of taxes, lack of
proper infrastructure and relatively high cost of
real estate are the other impediments to the
growth of retailing.
III. SUGGESTIONS
For the retailers to be able to successfully
face the challenges emerging in new competitive
environment, some of the key solutions are
Mastering Supply Chain to drive competitive
advantage
In creating a strong customer value
propositions, providing fresh and better product
assortments and having a better reach, mastering
supply chains is helpful to retailers. Consumers
who are more value conscious prefer good quality
products with lower prices. In order to meet this
demand, retailers need to be agile in moving goods
efficiently and quickly through the supply chain.
Product Localization:
Research and Development, Innovation and
developing new products are emerging as key
drivers of success for Retailers. As a result of this,
product localization has emerged as a driver of
sales, customer excitement, customer interest etc.
Indian consumers, while they want access to the
same products which are available in the overseas
market also want to feel that a product has been
created especially for them.
Securing the right retail estate:
In order to develop a strong national
presence and success in retailing, choosing the right
location is very important. The choice depends on
the availability of land, consumer needs, the type
and availability of products etc.
IV. CONCLUSION
From the analysis it is found out that the
Indian Retail Sector is evolving rapidly. The size
of India‟s retail industry is expected to be more
than double to $ 1.3 trillion by 2020. Organized
retail whose share in total was 8% in 2012 is
expected to assume 24% share of total retail market
in India in 2020. The Retail industry in India has
come forth as one of the most dynamic and fast
paced industries in which several players are
entering the market. The retail sector has played a
phenomenal role throughout the world in increasing
productivity or consumer goods and services.
There is no denying the fact that most of the
developing economics are very much relying on
their retail sector as a locomotive of growth. From
the analysis it is found out that though there is a
tremendous development in the retail industry, the
existing traditional retailers, modern organized
domestic and foreign retailers would have
opportunities and they have to face challenges. If
Emperor International Journal of Finance and Management Research [EIJFMR] Page 294
Paper ID: 13180243 ISSN: 2395-5929 UGC Jr. No. 45308 | IFS – 2018: 1.14 | SJIF 2016: 3.343 | SJIF 2017: 4.253 | ISI 2017-2018: 0.673
the suggestions given in the article for overcoming
the challenges are considered, there is no doubt that
the Indian Retail industry is gradually inching its
way towards becoming the next boom industry in
near future.
V. REFERENCE
1) Swar, B.N (2007),” Challenges and
Opportunities of Organized Retailing in India”,
Journal of IMS group, Vol-4(2).
2) Kavaldeep, D.(2008),“Retail Marketing in
India Key Issues and challenges”, Marketing
Mastermind. Pp.13-23.
3) Goyal, B and Aggarwal, M., (2009),
“Organized retailing in India-An empirical
study of appropriate formats and expected
trends”, Global Journal of Business Research,
Vol-3(2).
4) Deepika, Jhamb & Ravi, Kiran.(2011),
“Organized retail in India- drivers facilitator
and swot analysis”. Asian Journal of
Management Research.
5) Sikri,S. and Wadhwa D., (2012) “Growth and
Challenges of Retail Industry in India: an
Analysis”, Asia Pacific Journal of Marketing
and Management Review, Vol- 1(1),pp1-14.
6) Kanwaljeet, (2015) “Organised Retailing in
India: Opportunities and Challenges”,
International Journal of Commerce, Business
and Management (IJCBM). Vol.4(2): 1117-
1124.
7) Padma, D. and Shanthi, A., (2016) “Challenges
and Winning Strategies for organised
Retailers”, International Journal of Advance
Research in Computer Science and
Management Studies vol.4 (2) pp- 49-58.
Websites:
1) www.indianretail.com
2) http://www.retailingtoday.com
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