Page 25 - DMGT550_RETAIL_MANAGEMENT

Retail Management

Notes is getting more popular these days and getting organized as well. With growing market demand,
the industry is expected to grow at a pace of 25-30% annually. The India retail industry expectedly
grew from ` 35,000 crore in 2004-05 to ` 109,000 crore in the year 2010.

2.1 Organised Retail

As per the definition retail industry comprises of organized and unorganized sectors. Corporate
retailing refers to trading activities undertaken by licensed retailers, that is, those who are
registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and
retail chains, and also the privately owned large retail businesses. Unorganized retailing, on the
other hand, refers to the traditional formats of low-cost retailing.

Example: The local kirana shops, owner operated general stores, paan/beedi shops,
convenience stores, hand cart and pavement vendors, etc.

The self-organized sector is characterized by the lari-galla vendors (also known as “mobile
supermarket”) seen in every Indian by-lane and is, therefore, difficult to track, measure and
analyse. But they do know their business – these lowest cost retailers can be found everywhere
from village by-lanes to where big malls are situated. As far as location is concerned, these
retailers have succeeded beyond all doubt. They have neither village nor city-wide ambitions
nor plans – their aim is simply a long walk down the end of the next lane. This mode of “mobile
retailers” is neither scalable nor viable over the longer term, but is certainly replicable all over
India. Most retailing of fresh foods in India occurs in Mandis and roadside hawker parks. These
are highly organized in their own way. If we put all these hawkers together they almost measure
up to a large supermarket. In India around 97%-98% of the retail industry is unorganized.

Example: Among the organized ones the already established corporate retailers in India
are Pantaloon Retail, Shoppers’ Stop, Spencer’s, Hyper CITY, Lifestyle, Subhiksha and Reliance
Retail etc.
Organised retail has not penetrated and will not penetrate rural India for obvious reasons – it is
just unviable. It is only the urban areas that organised retail is slowly but not steadily
growing in.
The difference can also be seen in terms of kind of consumers they attract. The lower stratum
represents people who are either daily-wagers or who work for the unorganised trade and
industry; Their purchases are meagre and only the mom-and-pop stores will entertain them.
Those belonging to the lower end of the middle – income group are generally employees of
State/Central Governments and the organised private sector. Not generally upwardly mobile,
this group of employees has over a period of time perfected the art of living within their means
and what is more, they end up saving a bit too. To these people too, organised retail makes little
sense since they cannot afford to pay cash down for their purchases. They buy from the mom-
and-pop stores on credit during the month and settle the bill when they receive their salaries in
the first week of the succeeding month. At best, the lower end of the middle-income group may
patronise organised retail for purchase of vegetables because the vegetable vendor does not
provide credit anyway.

Those belonging to the upper middle income group and higher income group and living in
cities have been increasingly patronising organised trade thanks to the latter’s proliferation.
That way speaking, they have traditionally stayed away from the mom-and-pop stores as far as
possible.

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