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Unit 2: Structural Change in Retail Environment

them with the most up-to-date information on sales and inventory. To enhance profits, faster Notes
drug dispensing to speed up pharmacy transactions, reduce errors and improve customer
satisfaction is being achieved. Moreover, drug stores are also trying to attract customers and
enhance profits with higher-margin products such as convenience foods, cosmetics, etc. We
seem to be following the west in such developments. Meanwhile, drug stores are also experiencing
increased competition from supermarkets who are anxious to increase store traffic with pharmacy
sales. Thus, we see that for a category like pharma too, generic competition is not something
that stores can be immune to.

Jewellery Retailing

The jewellery market in India is estimated to be growing at 10% per annum. Of the total ` 50,000-
crore Indian jewellery market, which is growing at 3-5%, the diamond studded market accounts
for around ` 9,000 crore and is growing at 20%. Of the total diamond jewellery market, only 2%
is branded jewellery catered to by around 8-10 brands, which is why there is a huge potential for
branded diamond jewellery in India. Gold jewellery forms the major part of the jewellery
market in India.
Jewellery is a very fragmented business. There are around 2,50,000 jewellery retailers and there
are many more manufacturers. Tanishq and Oyzterbay are some of the prominent national
players in the serious fine jewellery segment. The others jewellery retailers are in just one city
or have a limited regional presence. Acquiring a high reputation for styling and reliability and
becoming an aspirational brand are prerequisites for the success of the national brand. As
regards reliability, the jewellery industry has chronically lacked ethics. In the Indian context,
therefore hallmarking has become a major movement in order to convince consumers about
genuineness of the jewellery purchased.

Furniture Retailing

An estimated 4.5 million houses are built every year and there is a latent demand for 33 million
homes in India. The housing sector is expected to grow at a fast pace driven by easy availability
of finance, rising ‘youth’ population and declining average age at which an individual purchases
a house (at 25-30 years as against 35-40 a few years ago). One’s furniture made by the local
carpenter is time consuming and one has no guarantee of after-sales service. Only about 10% of
the public still has their furniture made by local carpenters. In addition, there are not as many
skilled carpenters as 10-15 years ago. Moreover, no matter how skilled the carpenter is, s/he
cannot equal the finish that readymade or imported furniture can give. The furniture goods
sector comes next to grocery and apparel in being one of the largest retail sales goods in the
world. Furniture retail in India is a ` 17,500 crore annual industry including both residential
furniture and office furniture segments. The United States furniture industry is a very large and
fragmented market. No U.S. furniture retailer has more than 3% market share. In the U.S.,
average stock turns in the furniture retail industry are at just 2.5 to 3.0 per year. In spite of typical
50% (or greater) gross profit margins in the U.S., the cost of inbound freight, retail display,
warehousing, handling, and pre-delivery make the job of furniture retailing quite difficult. The
situation is no different in India. The lack of data on this front, however, makes it difficult to
make an emphatic statement about furniture retailing in India.

The Indian consumer in the home furniture market is now in a situation where a deluge of
options is available in terms of the material of furniture as well as its customisability. Case
goods furniture retailers the traditional lot among the retailers now face an onslaught in terms
of cheaper, trendier/fashionable, lighter, dismountable options. It has been observed in the U.S.
too that the consumer goes only to furniture retailers, rather than to a departmental store for

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