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Indian Retail at crossroad: Organized vs. Unorganized Retail (Part I)

Submitted by admin on Thu, 12/25/2008 - 00:17.

India is currently the twelfth largest consumer market in the world. According to a study by McKinsey Global Institute, India is likely to join the premier league of the worlds consumer markets by 2025, improving its position to the fifth. But this growth is not going to happen is smooth way. Any change always comes up with some friction,

and Indian retail sector is and will be witnessing the same friction. Indian retail sector is still in its nascent form if we consider its full potential. While most of the developed market of US and Europe and also some SE Asian emerging market economies have reaped the benefits of modern retail, India has not yet entered into advanced phase of modern retail forms. Tug of war: organized vs. unorganized sector Future of retail sector in India is swerving- on one side organized retail is marching into life of urban consumers, while on the other our own neighborhood kirana stores are resisting fiercely with their existing strong foothold. India today is at the crossroads with regard to the retail sector. A shift between organized and unorganized retail sector is evident, which has led to a number of speculations on the fate of Indian retail sector. Unorganized sector cannot be ignored In any newspaper or television channel, we find hordes of news about happening in organized retail sectors, which is indeed fairly real situation. While the role of organized retail sector in growth of economy cannot be denied, but one thing is also of extreme importance that unorganized retail format is a support to a large chunk of population- providing direct employment to 39,500,000 individuals. So there is no way that government or anyone can discount these foundation stone of Indian economy.

Changing landscape of Indian consumerism The face of Indian consumerism is changing: not Indian consumerism is evolving from Bajaj Scooter family man to Bajaj Pulsar trendy youngster. This changing consumers taste and lifestyle, somewhere automatically give some advantage to organized sector. This makes imperative for unorganized retail sector to restructure itself in order to withstand the increasing competition and to meet consumer expectations by moving with trends. What they can do and what they are doing, some of these issues will be discussed in future parts of article.

Role of government As in other countries, government policy can and should play an important role in modernizing the unorganized sector and improve its competitiveness. But question is what should be exact role of government. Should it go for policies for protection of traditional retailers by restricting organized retail or encourage organized retail to reap benefits that are generated by it? What should be mechanism to promote or protect one or other? Can government act only as a facilitator or enablers or both? In the said context, it is imperative to develop a strategic roadmap for unorganized retail form to be able to survive, compete and keep the economy growing.

any data?
Submitted by jeevanXP on Sun, 01/04/2009 - 01:11.

how many jobs they have created & how many taken? any data? reply

malls r cheaters
Submitted by Anonymous on Sun, 01/04/2009 - 01:08.

All malls r cheaters. First they r making ppl addicted, then robbing them. reply

what about the magazine? is

Submitted by mn on Fri, 01/02/2009 - 17:55.

what about the magazine? is the site not fully functional yet? will I receive such magazines/newsletters in my mailbox? Oops too many queries :) reply

Welcome to the site, yeah we

Submitted by admin on Fri, 01/02/2009 - 18:00.

Welcome to the site, yeah we are still working on some issues.. and will soon be able to put everything together. BTW your comments will keep us motivated, so plz keep visiting. reply

Hmmm! So its like I take

Submitted by ArunG on Thu, 01/01/2009 - 17:20.

In a country like India, there is a big threshold level for the organized sector. From the current 5% types share they will grow to 12-15% easily..but then what? Do they have the infrastructure to support smaller stores located in far-flung small towns? Even in cities we find them doing poorly on the distribution front. reply

personal touch...
Submitted by mugdha on Sun, 07/19/2009 - 11:24.

and what about the customized services and the personal touch that the local kirana stores gives us.??? is the indian consumer actually ready for the organized retail at the cost of the free home deliveries the local stores may provide???? furthur it seems impossible for the indian consumer to leave the benefits that the unorganized sector provides(including the bargaining power and loans) and move ahead to the organized retail...though increasing the market percentage of organized retail is beneficial for the economy as a whole or is this merely a statement?

reply

is increasing organized retail beneficial for the economy?

Submitted by induj123 on Wed, 07/22/2009 - 00:06.

One question i would like to answer, and it is increasing the market percentage of organized retail is beneficial for the economy as a whole or is this merely a statement?" I cannot answer it with precision and certainty, and perhaps nobody can answer this question with surety. But if we go by experience in developed countries as well as available studies, then we can find that increasing % of organized retailing do bring some benefits to economy. For example, in unorganized retailing, enormous amount of vegetables & fruits go rotten due to lack of refrigeration facilities. Organized retailing brings efficiency in terms of better up-keeping, preservation, transportation etc. as it can pool up resources due to larger scale of economy. reply

FDI in retail still at back!

Submitted by Anonymous on Sat, 07/25/2009 - 23:49.

India has no plans to allow foreign direct investment in multi-brand retail trade, the country's junior commerce and industry minister said Monday. "There is no proposal to change the current policy on retail trade," Jyotiraditya M. Scindia told lawmakers in the lower house of Parliament. Under current policy, foreign direct investment is not permitted in retail trade except in single-brand product retailing where foreign investment up to 51% is allowed. "Government fully recognizes the need to ensure that small retailers are not adversely affected by the growing organized retail and that there is no adverse effect on employment," Mr. Scindia said. now how can u answer the organized retailing scenario in india? reply

but what about the local retailers??

Submitted by Anonymous on Sat, 07/25/2009 - 23:43.

yes well i agree with ur answer induj123 but do u think our government is ready enough to face the strife of the angry local retailers?? afterall organized retail is at its initial stages in india though moving at a fast pace...

reply

Is increasing organized retail beneficial to economy?

Submitted by Anonymous on Tue, 07/21/2009 - 23:47.

one question i would like to answer, and it is " increasing the market percentage of organized retail is beneficial for the economy as a whole or is this merely a statement?" I cannot answering it with precision and certainty, and perhaps noboby can answer this question with surity. But if we go by experiance in developed countries as well as available studies, then we can find that incresing % of organized retailing do bring some benefits to economy. For example, in unganized retailing, enormous amount of vegetables & fruits go rotten due to lack of refrigeration facilities. Organized retailing brings efficiency in terms of better unkeeping, preservation, transpotation etc. as it can pool up resources due to larger scale of economy. reply

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