Do we need to acclimatize 'retailing' to the consumer demands?


By

Professor Anushree Agnihotri Mishra
Faculty of Marketing
K.J. Somaiya Institute of Management Studies & Research
Vidyanagar, Vidyavihar (East), Mumbai-400077
 


Introduction:

Indian Retail Industry has been ranked among the top ten key retail marketplaces in the global economy (FICCI- BISNET, 2008) and ranked at the top in Asian retail markets (A.T. Kearney GRDI, 2005). This demonstrates that competition has engrossed all the sectors of business including retail in India. As an outcome there is an attitudinal shift of the Indian consumer in terms of Choice and Value for Money. Shoppers are becoming more conscious and well-informed about merchandise display, retail formats and practices of retailing to uphold a consciousness for lifestyles and shopping standards (Agnihotri and Oburai, 2009).

Purpose of this Argumentative research paper:

The raison d'ętre of the current paper is twofold.

Firstly, it is vital to scrutinize the character of Indian-retail-sector transformations taking place in the structure of organized form of retailing and the immediate implications. Secondly, this vicinity has remained chiefly an uncultivated fraction of research to-date, so this work is to understand better what all factors impact most, the behavior of Indian Shopper.

This paper consists of a series of arguments backed by a number of specifics and facts.

Indian Retail Sector:

Let us initially discuss the insights about the notable augmentation, expansion and the exclusive execution of the retail industry in India.

"Liberalization of the Indian economy and rationalization of business procedures have already ensured a high economic growth with a rapidly expanding base for the manufacturing and hi-end services sectors. Fresh avenues for gainful employment to a predominantly young and talented population have created high disposable incomes that translate in to higher consumption and thus better opportunities for all verticals of Retail to flourish". (Indian Retail Report 2009).

Lately, our economy has endured the effects of Global meltdown impacting almost all the industries including retail, still to our surprise, this industry is experiencing consistent growth and expansion either by the host country retailers or the home country retailers. India attempts to face the upward movement of level of price and currency, the retailers try to supply what the consumers' demand.

15 million retailers have created sufficient space in India to flourish, and majority of them possess small mom and pop unorganized retail stores. There is slight scope for conflict and divergence as verified mentioning that India shows a unique pattern of consumption-driven economy. (expresshospitality.com, June 2008).

The Retail Uprising:

More than a few, States in India are allowing retailers to procure the produce directly from farmers, and the farmers too, are trying to cope-up with the changing needs in the retailers'-demand to grow assigned crops and take special care of the same. This opportunity gives farmer on the spot credit at higher prices than what they received from middlemen. Many retailers like ITC, Reliance and many others have already established the farm linkages. Now, Indian farmers can make good money, after centuries of exploitation. The government has chipped in with a substantial loan waiver worth Rs 60,000 crore to reduce the farmers' debt trouble (Indian Retail Report,2009)

At present the retail market is estimated at Rs. 13,30,000 crore in India, and more or less 50 percent  of  this lies in rural India. Rural India holds incredible growth prospects and boulevards to economic development, which are much needed to be availed with due heed.

"According to National Council of Applied Economic Research (NCAER) reports, rural India is home to 720 million consumers across 627,000 villages. Seventeen per cent of these villages account for 50 per cent of the rural population, as well as 60 per cent of rural wealth. This implies that reaching out to just 100,000 plus villages will ensure access to most of the rural opportunity" (IRR 2009).

Consumerism: Another facet in the Indian-Retail-Character

Consumerism is nothing but an awakening, a realization for the need to be informed and educated concerning the marketplace and business environment as a whole.

Mounting consumerism would definitely act as a driver for the growth of organized Indian retail zone. In essence, consumerism- is the change in the behavioral patterns of Indian consumers'. And that is what has emerged as a disquieting challenge in front of Indian retailers.

We can always argue that this can be due to the western influence, or the increased urbanization, or the growing young population, or just the stimulating outcome  of organized retail zone in India.

There are numerous demographic trends that are constructive for the growth of organized retail:

1. Rapid income growth : Consumers have greater ability to spend.

2. Increasing Urbanization : Larger urban population which values convenience coupled with higher propensity of the urban consumer to spend.

3. Growing young population : Growth of post liberalization maturing population with the willingness to spend. Youthful population is the prime asset to India as its craving for cinema, gaming and entertainment has elevated the need for malls and multiplexes in the country.   

4. Tendency to spend now versus save earlier: Consumers willing to borrow for current
Consumption (TSMG, Tata Review June 2006)

Evidently, the retailers excelling in India are aiming to capture a bit of consumer's interest and their share-of-wallet, with all possible efforts. This is indeed an indication of how vital the new age consumer segment has become in the recent years.

According to the FICCI Retail Report (2007), "the success of retailers' worldwide depends upon their ability to innovate and adapt models that have wider acceptability to the local consumers. The nature of research, invention and innovations undoubtedly differs from product to product. This inter-alia, implies that products should be as per consumers taste and choice."

At present, the Indian market is dominated by millions of mom-and-pop stores. Malls are mushrooming at a maddening rate, but most require the apt planning to magnetize global retailers and establish strong brand loyalties among the consumer segments.

Dialogue & Remark:

Retail initiatives are mostly concentrated in the tier-I and tier-II cities wherein we can always see that the retail growth in India is not uniformly spread. It is constant urban retail market growth which is making this sector saturated and over-supplied. The Indian retail giants are however realizing the need to look into new spheres of the nation. Tier-III cities and rural markets are either untouched by big retailers or are not-so-supplied markets which may possibly become a prospective attraction for the growth-eager retailers.

"DCM Hariyali Kisan Bazaars and Godrej Aadhars have already set up rural retail hubs, ITC Choupal Sagar has done the same and so have Tata Kisan Sansars, Reliance Fresh, and others like the Naya Yug Bazaar"(expresshospitality.com, June 2008).

In today's quest, Indian consumers are becoming more knowledgeable and clued-up about the notion of quality of products and services. Since liberalization, consumers are getting a flavor of  up-to-the-minute national and international products through diverse media and mode.

Keeping this in view, a retail store must possess an environment which has an appealing display that can trigger the shoppers' buying eagerness and intent, which can alongside help in coping with the changing environment and rising expectations.

The Indian retail sector has been gaining force, riding on the vibes generated by a robust economy that has given further disposable earnings in the hand of the consumer who will keep demanding improved products and services, and a healthier shopping environment.

This demand for improved shopping experience, leisure and entertainment will keep expanding. No recession can affect it for sure.

Annexure in support :

Annexure 1:


Source: NCAER Figures from Organized Retail in India: The Next Growth Frontier, TSMG.

Annexure 2:


Annexure 3:


Annexure 4:

Year

Growth

Function

2000

First Phase

Entry,Growth,Expansion,Top Line forces

2005

Second Phase

Range,Portfolio,Former Options

2008

Third Phase

End to end supply chain management,Backend operation,Technology ,Process

2011

Fourth Phase

M&A,Shakeout,Consolidation,High Investment


Source: A Report by Ernst&Young for IBEF,www.ibef.org/download%5c Retail_220708.pdf

Annexure 5:


Source: ICFAI Journal of Services Marketing, Sep2008, Vol. 6 Issue 3, p18-28

References:

Agnihotri A. and Oburai P.(2009). Shoppers' interaction with visual merchandising elements in organized grocery stores, Proceedings of 3rd IIMA Conference on Marketing Paradigm for Emerging Economies.

A.T. Kearney GRDI,(2005). http://www.atkearney.com/main.taf?p=5,3,1,110

Balaji, Chetan., Tuli, Rajnish., & Srivastave, Nidhi, V. (2005). Retail Management, Oxford University Press, New Delhi.

Boston Analytics (June 2009).Selling and Distribution in India.

Churchill, Gilbert, Jr., and Peter paul, J. (1999). Marketing: Creating Value for Customers, (2nd ed.). McGraw Hill,Boston.

CII report retail (2005). Retail Scenario in India.

FICCI-BISNET(2008)(online). http://www.indiainbusiness.nic.in/economy/economic_snapshot.htm

FICCI retail report (2007). Organized retail, unfinished agenda and challenges ahead.

Ganguli, Shirshendu and Kumar, B Vinoth.( 2008) Drivers of Customer Satisfaction and Loyalty

in Indian Retail Supermarkets: An Exploratory Study, The Icfaian Journal of Management Research, Vol. VII, No. 12.

India Retail Report (2009). IMAGES F&R Research.

Majumdar, Aveek. (December, 2005). A model for customer loyalty for retail stores inside shopping malls- an Indian Perspective(Special Issue),Journal of Services Research

Miranda M J and Konya L (2008), "Are Supermarket Shoppers Attracted to Specialty Merchandise Rewards?", Marketing Intelligence and Planning, Vol. 26, No. 1, pp. 43-59.

Mishra, Rohita Kumar. (Nov 2009).Benchmarking Scheme for Retail Stores Efficiency, International Journal of Marketing Studies, , Vol. 1, No. 2.

Tata Review June 2006, TSMG

www.expresshospitality.com(June 2008).
 


Professor Anushree Agnihotri Mishra
Faculty of Marketing
K.J. Somaiya Institute of Management Studies & Research
Vidyanagar, Vidyavihar (East), Mumbai-400077
 

Source: E-mail January 11, 2011

       

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