Post on 20-Jun-2015
transcript
Retail Industry in India: Trends, Key Driving Factors and Socio-Economic Impact
-A.M.Narahari, Registrar.St . Aloysius College (Autonomous), Mangalore
amnarahari@gmail.com
National Seminar on
“Marketing Revolution: Emerging Trends in Retail Marketing”
Vidyodaya Arts & Commerce First Grade College, T.Narasipura.
September 17, 2011
Traditional Vs Modern Retail Industry
• Family Owned Vs Corporate-MNCs
• Sellers’ Market- Buyers’ Market
• Un Organised Vs Organised• Limited Competition• Limited Choices• Less Brand Loyalty• Retailer Domination• Mom and Pop Stores• Cost Driven• Less Innovation• Single Location Operation
Indian Consumer
• Value-for Money-Buy• More shopping time• Less customer service• Retailers’ Reputation• ‘Lifestyle’ was rare• Hawkers and local markets
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TRENDS
1. Projected as Prominent service industry- substantial contribution to GDP- about 10-14% of GDP
2. Corporate entry- small to large - Internationalisation – entry of MNCs- international brands
3. Phenomenal growth- Traditional on the decline -96% to 80% & Organised on the rise-4% to 20%
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TRENDS cont…
4. Electronic Mode- Technology driven-information explosion
5. Urbanisation- Almost 33% of the population
6. Facilitating Consumerism -Changing life style
7. Impetus to food & groceries
8. New value added services-non-store outlets, entertainemt, restaurants, games, etc.
•
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ENTRY OF LUXURY PRODUCTS• Jewellery Graded Watches
and Pens• Branded Jewellery• Crystalware by the likes of
Swarovsky• Designerware Clothes,
Shoes, Ties & Suits• Luxury Automobiles (Cars, Buses, Two-
Wheelers and Others)
• Healthcare & Fitness Products
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RETAIL MARKET PLAYERS• Large Retail Formats• Automatic Vending
Machines• Direct Mail &
Catalogue• TV Home Shopping• Online Retailing• Telemarketing• Direct Selling
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CONSPICUOUSNESS OF RETAIL MARKET
• Chinese Products• Bottom of the Pyramid
Approach of C.K.Prahlad• Mass Marketing(civil
aviation, Railways)• Rural Marketing• Products Tailor-made for the
customers(Seasonal Insurance Premium Products, Micro-finance and Biometric Transactions, ITC Choupal)
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KEY DRIVING FACTORS• Demographic Changes-
Youthful-enhanced life expectancy-larger labour foce- urbanization
• Value Shift- Joint Family to Nuclear Family, Material Culture Vs Thrift & Simplicity, Luxury Vs Necessities-Conservatism to consumerism- Changing life styles
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KEY DRIVING FACTORS• Liberal Policy
perspectives in retail markets for speedier economic growth
• Rising Income• Consumer Finance• Aggressive
Marketing
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KEY DRIVING FACTORS• Western Lifestyles• TV Channels• Organised
Retailing• Corporate Entry• Franchisee for
Foreign Brands• Urbanisation• Credit Card
Marketing
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TECHNOLOGY-THE ENABLER• Reaching Customers• Promotion• Buying• Delivery • Payment• Servicing• Interactive Maintenance• Information• Getting the Response• Getting the Feedback
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SOCIO- ECONOMIC IMPACT• Customer is the king- Still
limited choice• Facilitating economic
growth- issue of uneven growth, regional disparities- wide gap in income distribution
• Convenient life style• New Paradigm in price
mechanisms- economies of large scale-discount stores
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SOCIO- ECONOMIC IMPACT• Cultural impact- India is
like EU- 29 states equal 10-12 countries in terms of language, culture & economic development
• Unorganized retail market in an agrarian economy
• Mind game –consumer obsession- Food Stores- KFC- McDonald- Junk foods
• Real Estate Issues
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SOCIO- ECONOMIC IMPACT• Deceptive pricing
strategies- Discount offerings- Buyer beware concept still relevant-predatory pricing – Monospony market
• Unethical practices-Corruption
• Genetically modified – Artificially blended-makeshift strategies for taking the consumer for a ride
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Foreign Direct Investment: Is it wise to allow a free entry?
• WTO- GATS obligations• Industry strongly advocating
supported by the Planning Commission & concerned ministries
• FDI already existing –JV, franchising, cash & carry operation, direct marketing, 51% in single brand retail- issue of direct investment
• Focus on two issues- Employment & Consumer Welfare- study shows decline in employment elasticity with liberalization
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KEY ISSUESI: Uniqueness of Indian retail market- • a. end consumers reached through
– i. Vertical separation- through retailers– ii. Vertical integration- direct
• But India -small-highly fragmented- unorganized• Customer relation established by small retailers• No barrier for entry or exit• Socio-political stability in terms of employment• Under employment- disguised employment highest• Organised market in nascent stage
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II: Benefits of FDI : Pull-Push Factors
Pull• Organized players
collaborate to expand• Expertise available
with world leaders• Meeting foreign
currency crisis• can satisfy customers
Push• They are interested in India• Emerging mkt- even for
procurement-handicraft & semi-finished
• Share of FDI declining in developed countries
• Internationalization-great opportunity for maxmising return on investment
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KEY ISSUES
III: Impact on marginal producers & Workforce- experience of other countries
IV: Impact on existing Labour Laws
V: Safeguard options available to Government to protect small producers/suppliers- MFN, National Treatment concepts
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Challenges Ahead • Empowering small retailers for an inclusive
growth- effective co-existence with organized market- corporate social responsibility-bottom of the pyramid approach
• Retail cooperatives for small retailers- this may facilitate QR (quick response & ECR (efficient consumer response)
• More effective Consumer education- protection- • Regulations for protecting cultural identity• Promoting ethical practices
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Challenges Ahead • Merger & Acquisitions of weak outlets• Change of mindset of retailers with the
support of manufacturers to satisfy the target customers
• Use of technology for business excellence by setting up a network of independent firms
• Setting up of franchisee organization- & non-store retailing channels
• Liberalisation with a human face
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REFERENCES1. Narayana, K.G. S & P.K. Sudarsan ( 2008): Globalisation of
Retailing: An Indian Perspective, The associated Publishers, NewDelhi
2. Vedamani, Gibson G ( 2010) : Retail Management: Functional Principles and Practices , JAICO , Mumbai
3. Soni, Ajaya N ( 2010) : Retail Management , Oxford Book Company
4. Shewan, M.A. ( 2008): Retail Management , Sonali Publications, New Delhi
5. Rosemary, Varky & Rafiq Mohammed ( 2007) : Principles of Retail management, Palgrave Mcmillan, Newyork
6. www:google.com, accessed on September 06, 07,08 and 13, 2011
7. Inputs from various Scholars