Date Published: April 2006, Pages: 390, Tables: 23, Figures: 46

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SIGNIFICANT RETAIL TRENDS IN INDIA

The following are some of the significant trends in the Indian retail industry:

RAPIDLY CHANGING CUSTOMER BEHAVIOUR

From the early 1990s, the scenario in India was beginning to change.  This change was coming from two sources. First, the manufacturers, lured by the almost “proverbial 200 million” strong Indian middle class, were continually adding to the range of products in the marketplace. Among the faster moving consumer goods, while there were 57 core categories in India in 1990, an additional 19 had entered the market by 1996 and the final figure stands at about 150+ as of now. These new categories contributed to about 2500 brands and about 5000 stock keeping units (SKUs). As the manufacturers produced more and more products and variants, focused on the specific needs of more clearly segmented consumers, the shopkeepers’ ability to manage his small shop was becoming increasingly complex.

Over the years, the increasing literacy in the Country and the exposure to developed nations via satellite television or by way of the overseas work experiences, the consumer awareness has increased on the quality and the price of the products/services that is expected. Today more and more consumers are vocal on the quality of the products/services that they expect from the market. This awareness has made the consumer seek more and more reliable sources for purchases and hence the logical shift to purchases from the organized retail chains that has a corporate background and where the accountability is more pronounced. The consumer also seeks to purchase from a place where his/her feedback is more valued.

Indian customers are now more aware and discerning, had been exposed for some years to a rapidly proliferating media, and were beginning to demand benefits beyond just availability of a range of products that came from ‘trusted’ manufacturers. In a retailing context this change in consumer consciousness is reflected in their desire for:

· the opportunity to see, evaluate and buy from a large assortment of products at one location;

· a shopping experience, which is pleasurable, and if possible, even exciting; and

· a shopping experience that is inexpensive, well presented and durable

 

In other words, the Indian consumer is beginning to accept shopping to be a pleasurable experience, but is unwilling to pay a price premium.

EMERGENCE OF DISCOUNT STORES

In 2002-03, Indians in some cities got the taste of discount stores for the first time. Thanks to discount stores, the local kirana stores are under pressure and consumers are getting increasingly aware of the advantages of buying in bulk at higher discounts. With perhaps every item of daily use available at the discount stores like Big Bazaar and that too at wholesale prices, consumers easily accepted this format over local kirana stores. The discount stores emerged as class-less stores with consumers of all income-levels shopping at these stores. We expect that there will be rapid expansion of discount stores to tier-2 and tier-3 cities and your company is already experimenting in them. The growth opportunities are highest there.

Abstract

Retail is India’s largest industry, accounting for over 10 per cent of the country’s GDP and around eight per cent of the employment. Retail industry in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. But because of the heavy initial investments required, break even is difficult to achieve and many of these players have not tasted success so far. However, the future is promising; the market is growing, government policies are becoming more favorable and emerging technologies are facilitating operations. Retailing in India is gradually inching its way toward becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector in India.