The Spread of Organized Retailing

Advent of organized retailing

The expansion of organized retailing began during 1995 in India. The world has started depending more upon retail stores which resulted in a massive growth of such industry vertical. The organized retail sells consumer products. Such growth of organized retailing has enabled building of brand value of domestic products. Based on consumer expectations, there has been a transformation in retail from traditional to modern structure. This change is possible through positive economic development. If we look at the statistics, in India alone the growth of consumption market is between 7 to 8% with organized retail covering 5% of the hype.

What is retail?

The retail industry engages in selling the finished consumer goods to the end-users. It can be divided into organized and unorganized sectors. Since organized retail has low operational costs, it can leverage sales through heavy discounts. Organized retail includes corporate backed hypermarkets, grocery stores and retail chains. While the unorganized ones are local or general stores manned by individuals locally.

Factors contributing growth of organized retailing

Organized retailing is expanding and spreading across the consumer market. A considerable change has been observed lately in consumer buying behavior. Air-conditioned shopping centers, multistoried shopping malls and the like has made the shopping experience seamless adding more comfort through entertainment and food under the same roof. Initially the boom observed in the retail sector was observed in metro cities only, slowly it spread across the rural part as well.

There are several socio-economic factors that contributed to such a growth of organized retailing. They are:

  • Influence of visual media that made customers brand aware
  • Fashion conscious young population
  • Favorable income demographics
  • Increase in the number of youngsters joining the workforce
  • Increase in disposable income
  • Rise of consumerism
  • Easy availability of consumer goods due to increase in the number of retail shops
  • Both buyer and seller benefit from the retail
  • Growth of middle-class consumer
  • Increase in number of working women
  • Value for money – quality product at reasonable price
  • Emergence of rural market
  • Entry of business tycoons in retail industry
  • Entry of foreign retailers
  • Contribution of technology and innovation

Prominent organized retailers

The following are the few important organized retailers in the market.

  • Nilgiris – the supermarket chain in South India sells fresh produce
  • Reliance Fresh – a convenience store that sells sell fresh fruits and vegetables, staples, groceries, fresh juice, bars and dairy products
  • More – operates both as supermarket and hypermarket
  • Big Bazaar – is a hypermarket pan India

Prevailing Challenges

The first and foremost challenge faced by the organized retail industry is the competition from its traditional counterpart. The traditional retail is highly unorganized, it has a low-cost structure and operated by individuals. It employs cheap labor and most of the times evade tax. Such traditional retail store is deep-rooted and still exist in India. An organized sector, on the contrary, employs skilled labor, state of the art infrastructure etc, which involves more operational cost in comparison to the traditional retail shops.

Conclusion

The retail industry is one of the most fast-paced and dynamic one with several players entering the market continuously. Due to lack of investment, many new retail ventures suffer a setback. However, the future of organized retailing looks bright with favorable Government policies and technological advances. Infact, secondary resources reveal that India ranks fourth among thirty countries where development of retail is prominent.

– Kathakali Basu,
Content Writer,
Infoholic Research