Tuesday, April 8, 2008

India’s Retail Evolution

The era of rural retail industry could be categorized into two formats: weekly markets and village fairs. Primarily weekly formats catered to the daily necessities of villagers. Village fairs were larger in size with a wide variety of goods sold from food, clothing, cosmetics and small consumer durables. The traditional era saw the emergence of the neighborhood ‘Kirana’ store to cater to convenience of the Indian consumers. The era of government support saw indigenous franchise model of store chains run by Khadi & Village Industries Commission. The KVIC has a countrywide chain of 7000 plus stores in India. This period also witnessed the emergence of shopping centers with car parking facility. The Modern era has a host of small and large formats with exclusive outlets showcasing a complete range of products. The department stores and shopping malls targeting to provide a complete destination experience for all segments of the society. The hyper and super markets are consistently trying to provide the customer with the 3 V’s. (Value, Variety and Volume)

Over the last three years, this sector has witnessed an exorbitant growth due to the establishment of numerous international quality formats to suit the Indian purchase behavior, the improvement in retail processes, the development of retail specific properties and the emergence of both, domestic and international organizations.

Retailing sector is the second largest employer in the country with almost over 12 million retail outlets in India and only 4% of them being larger than 500 square feet in size. Although retailing in India is fairly fragmented, organized retailing is gaining momentum rapidly growing at almost 25-30% per annum and is forecasted to touch a figure of Rs I,50,000 crore by 2010. The economy is projected to grow at 8.1% in 2005-2006 having grown at a steady pace of around 6% over the last 10 years.

Organized retailers are the contemporary formats by which shoppers have the edge of a world class shopping experience. Fine examples of these formats are Pantaloon, Shoppers Stop and Trent. Organized retail may broadly be classified into the following formats-
  • Malls. The largest form of organized retiling today. Malls are located mainly in metro cities, in proximity to urban outskirts, this format ranges from approximately 60,000 sq ft to 7,00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof.
  • Hypermarkets. They are typically large, starting from 40,000sq. ft plus are usually located outside the city limits. This format comprises of a multiple division layout, and usually has an” industrial- look” interior. Hypermarkets generally provide daily necessities and grocery like items. Pricing is competitive and they also offer volume discounts.
  • MBO’s. Multi Brand outlets, also known as Category Killers, offer several brands across a single product category. These usually do well in busy market places and Metros.
  • Super Markets. Large self service outlets, catering to varied shopper needs are termed as Super markets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from a size of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales.
  • Discount Stores. As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable/ non perishable goods.
  • Convenience Stores. These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium.
  • Departmental Store. Large stores ranging from 20000-50000 sq. ft, catering to a variety of consumer needs. Further classified into localized departments such as clothing, toys, home, groceries, etc.
  • Exclusive Store. Ranging from a size of 500 sq ft to 5,000 sq ft. & above, this format is owned/ managed by the Company or through its franchise. These can offer single brand as well as multiple bands.
  • Specialty Store. These formats focus on a specific product category, Medium sized layout in strategic location. Specialty stores provide a large variety base for the consumers to choose from.

For Further Information please contact:
Jaya Duggal
Manager- Marketing
Dynamic Vertical Software Pvt. Ltd.
Vatika Towers, Block A, 1st Floor, Sector 54, DLF Golf Course Road,
Gurgaon – 122002, India
Ph: +91-124-4581000 / 4581036
Fax: +91-124-4581026
Website: www.dynamicverticals.com

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