By

Sushant T. Joshi
Retail is final stage of an economic
activity.
Retailing includes all the activities
involved in selling goods and services
to final consumers for personal and non
business use.
The word is derived from the French
word retaillier which means to cut off a
piece or to break bulk.
Retail may be redefined as the first
point of customer contact.
Form utility – supplies the product in
the form the customer wants.
Time utility – creates time utility by
keeping the store open when
consumers prefer to shop.
Place utility – by being available at a
convenient location.
Ownership utility – when the product is
sold.
 Year $ Billion % Growth

2009 (E) 12,104.0 4.70%

2008 (E) 11,561.5 4.80%

2007 (E) 11,029.1 5.10%

2006 10,496.3 5.20%

2005 9,981.1 5.10%

2004 9,498.5 5.5%

2003 9,005.4 4.50%

Source : Global Retailing by Datamonitor , Oct 2007

Wal- Mart – USA
Carrefour – France
Metro – Germany
Tesco – UK
Kroger – USA
Home Depot – USA
Aeon – Japan
India is currently the 9th biggest retail market in the world.
With eleven retail shops for every 1000 persons, India has the
highest shop density in the world.
With a three year compounded annual growth of 46.64
percent, retail is the fastest growing sector in India.
It is estimated that by 2010, organized retailing in India will
cross the US$ 21.5-billion mark from the current size of US$
7.5 billion.
Also, it is envisaged that 50 million sq.ft. of area is going to be
developed for retail in the next 5 years. With compounded
annual growth of 46.64 percent, retail is the fastest growing
sector in India.
Buying ritual has become shopping
experience.
It is a celebration and entertainment.
The concept of value for money is
gaining importance.
The information that the Indian
consumer has access to is immense
which leads to the freedom of choice
and in turn the demand for the
differently organized retail formats.
Haats
Melas
Mandis
PDS (Public Distribution System)
CSD (Canteen Store Department)
KVIC (Khadi and Village Industries
Commission)
Post Offices
Haats are periodic markets that form a major
part of the rural market system in India. This is
a location which witnesses a public gathering
of buyers and sellers at fixed times and fixed
locations. Some interesting facts about the
Haats are:
Average sale per day: Rs. 2.25 lakhs
Number of sales outlet per Haat: 300+
Number of visitors per Haats: 4500+
Average sale per outlet: Rs. 900
Villages covered by a Haat: 20 to 50
Melas are fairs, and they can range
from commodity fair to religious fairs.
Virtually every state in India has Melas
for which it is known, it is estimated
that more than 25,000 Melas are held
every year in the country.
It is also estimated that the average
outlet in every Mela would be more
than 800 and the average sale per
Mela would be Rs. 143 lakhs.
Mandis are markets set up by the state
government for the sale of agriculture
produce directly from the farmers.
Close to 6,800 Mandis exists in India
and are believed to cater a population
of 1.36 lakhs.
This format is also popularly known as Ration
Shops or now increasingly called as fair price
shops.
It started with the food grains as SKU’s and
later essential commodities like sugar, cooking
coal and kerosene oil were added to
commodity basket of PDS.
PDS has now changed from typical rationing
system to a system which makes food grains
available at a fare prices.
The numbers of PDS or Ration shops in India
are 463,000.
It is one of the well established and
highly appreciated for the quality of the
products being sold.
The customer base of this is
particularly the defense personnel.
This retail chain amounts to total of
3400 shops all over India.
The Khadi and Village Industries
Commission was set up post
independence.
Today there are more than 7000 stores
run by KVIC.
It is the largest and the oldest network of
retail outlets in India with over 463,000
post offices in India reaching almost all
650,000 villages in India.
The product portfolio includes mail
services, financial services and premium
services like passport etc. the significance
of the this form of retail is the credibility
of the post offices in India is probably the
highest amongst any services.
The most important of them all is the Kirana
Stores or Mom n Pop stores in nearby
residential areas.
The market share of these format combined
together is almost 95% of the total retail trade
in India.
Over 11 million outlets employ over 4 cores
people. 96 % of these stores are less than 500
sq. ft..
Amongst the other established formats are
departmental stores, multibrand showrooms,
cooperative stores and the Pan/ Beedi shops
are amongst the established formats.
Convenience Stores
Supermarkets
Hypermarket
Specialty Stores
Departmental Stores
Factory Outlets
These are relatively small stores near to
residential area.
They are open for long hours and 7 days a
week.
Offer a limited line of convenient products
like eggs, bread, butter, milk etc.
International size is 3000 – 8000 sq. ft
where as Indian size is 500 – 1000 sq. ft.
e.g. In & Out stores, 7 – Eleven etc.
These are large, low cost, low margin,
high volume, self service formats.
SKUs include food, groceries and non
food items.
It sells at least 70% food stuff and
every day commodities.
International size is 8000 – 20000 sq.ft.
and Indian size is 800 – 5000 sq. ft.
Foodworld, Nilgiri’s, Subhiksha, Tesco,
Kroger
A retail store with at least 35 %
devoted to non grocery products.
Offers clothes, jewellery, hardware,
electronics goods, books, CD’s.
It is basically the combination of
supermarket and departmental store.
International size is 80000 – 220000
and Indian size is 40000 -75000.
Wal-Mart, Big Bazar, Giant
A store specializing in a particular type
of merchandise e.g. home furniture,
consumer electronics etc.
Narrow product line but deep
assortment in the product line.
International size 5000 – 8000 sq. ft
whereas Indian size is 2000 – 5000 sq.
ft.
E.g. Crossworld, Planet M, Music World.
Store selling products like clothing,
accessories, cosmetics, household goods
etc.
Products like food, clothing and home
related at least 10% but less than 70%.
Self service ratio less than 50%.
Internationally departmental stores are
75000+ sq. ft. but in India they are 5000 –
40000 sq. ft.
E.g. Marks & Spencer, Shoppers stop,
Stores which sells branded
merchandising at a discounts.
Level of service is low.
Typically these are franchises outlets
located away from the main market.
Internationally these are typically 5000
– 10000 sq. ft. and in India it is 500 –
1000 sq. ft.
E.g. Levi’s Factory outlet, Reebok
Outlet etc.
Population
Changing Income profiles
Diminishing difference between Rural
and Urban India
Rise of Self Employed
Environmental change drive aspiration
Striving
The Rise of the woman
The size of population in India has always made it a
large market.
1.10 billion People and almost 40 % of the
population is youth which makes it more lucrative
market.
According to the estimates by 2015 there will be
830 million earners in India.
Aspiration, wants of these people thought are
different but it definitely creates the opportunities
for the retail trade which keep growing every day.
One more aspect of this population is that the 26 %
of the population is still below the poverty line but
still catering to the basic needs of these people (As
per the Maslow’s Hierarchy of Needs) is daunting
According to NCAER the average middle class
family’s disposable income rose by more than
20% from 1993 to 2006.
The middle income and the upper income
categories are likely to witness the most
significant expansion in the coming decade.
The upper and middle class are likely to
increase their share in the population from
19.6% in 1995 – 1996 to 42.6% in 2009 –
2010. , a substantial increase, while the middle
income group likely to witness an increase
from 32.9% to 39.8% in the same period.
 Annual Income in
Consumer Classes 1996 2001 2007 Change
Rs.
Rs. 215,000 and
The Rich 1.2 2.0 6.2 416%
more
The Consuming
Rs 45- 215,000 32.5 54.6 90.9 179%
Class
The Climbers Rs. 22-45,000 54.1 71.6 74.1 37%

The Aspirants Rs. 16-22,000 44 28.1 15.3 -65%

The Destitute Below Rs. 16,000 33 23.4 12.8 -61%

Total 164.8 180.7 199.2 21%

Source : NCAER
Rural India amounts to 70 % of India’s
population and this itself offers a tremendous
opportunity for generating volume driven
growth.
It is interesting to note that LIC sold 50% of its
policies in Rural India in year 2005-06.
Of the over two million BSNL mobile phone
connections more than 50 % are in small
towns and villages.
This kind of phenomenon is evident in all type
of products and services. So the diminishing
difference between the Rural and Urban India
is pretty evident.
This makes it easier for the marketer to
develop and market new goods and services
Rural India has always been largely self-employed.
But now the proportion of the self-employed in
urban India has risen to 40% plus, replacing the
employed salary earner as the new 'mainstream
market'.
A Hansa Research Group (HRG) study shows that
even in the 'creamy layer', comprising the top two
social classes in towns of 10 lakh plus population
in urban India, 40% of chief wage earners of
households are shop owners, petty traders,
businessmen and self-employed professionals.
Unlike the salary earner, the self-employed use
products much more to signal success and are also
fast adopters of any productivity tools, like cell
phones and two-wheelers, that can help them earn
more.
Better connectivity and communication, and
the literacy leap, are together increasing the
aspiration of the Indian consumers at every
level.
The reason why these changes drive aspiration
is lucidly explained by the well-known
anthropologist, Arjun Appadurai, of Yale
University: "Imagination is not about individual
escape. It is a collective social activity.
Informational resources are needed for people
to even imagine a possible life, weave a story
and a script around themselves, and place
products in emerging sequences. Imagination
may not always lead to action, but it is a
prelude to action."
Most Indian consumers, whether rich or
poor, want to get ahead in a hurry.
From being destiny-driven and resigned,
they are now destination-driven and
striving to grasp opportunities to earn
more in order to construct a better life for
themselves and their children.
If one were to segment the country into
the Arriving, the Striving and the
Resigned, the proportion of Resigned has
definitely decreased and become
geographically concentrated, rather than
well-dispersed, as it was earlier.
Like the self-employed, women too are
saying "I can and I will," and emerging
as partners in family progress.
Not so much from earning the second
income (a mere 23% of Indian
households have working wives and
that proportion decreases as incomes
increase) but by being CEOs of
households and intellectual nurturers of
their children.
Target Segment
Quality at lower price
Consumer Service
Inclusive Growth
Technology Driven Retailing
The Indian market is a collection of unique little
markets, each with its own values. The forces
acting on these little India's trigger different
changes for each. That's why, the size and
opportunity of the Indian market is not a simple
find.
Therefore, the question that businesses need to
answer is: "What is my target India?"
Understanding the target segment is very
important while doing business in India so that the
product offering is made suitable for the consumer.
Changing markets needs new basis of
segmentation rather than usual income
segmentation or rural/ urban segmentation.
The focus should be on utility of the products to the
It is observed that the Indian consumer
is definitely price conscious but he/she
does not want to consume the inferior
quality product.
To achieve this marketer need to strive
for supply chain perfection which leads
to a lower cost or better quality or
both, and then it must be translated
into a customer benefit of a unique
price performance point.
Most of the marketers believe that the consumer
needs to serve in the best possible way but there
is problem in the implementation.
The behavior of the front line employees in many
organizations is artificial and a result of this they
are unable to connect themselves with the
consumer.
The customer care aspect can not be taught it can
only be achieved with the greater level of self
motivation on the employee part.
They need to show empathy towards the
consumer so that the connection is established
between the buyer and the seller. This is one of
the aspect wherein the local Baniya scores better
than the organized retailer.
The incidences in UP, Maharashtra or in
many parts of the country wherein the local
vendor protests made the giants like
Reliance to shut the outlets.
Here one should notice that it happened to
Reliance fresh, Future group, Tata’s etc. but
ITC’s ‘Choupal Sagar’ project is very well
accepted by the Indian consumer, vendors
and the farmers.
The reason that I see for the success of the
ITC is inclusive growth and making the
entire stakeholder realize that the business
model is not to harm them anyways but
actually make their life simpler and
profitable.
With the massive flow of information
accessible to the Indian public this as
mentioned earlier leads to freedom of
choice.
The shopping is an experience than the
ritual today. People enjoy shopping
experience. It is an entertainment to
them.
The marketers need to make it more
convenient and enjoyable experience for
the consumer. This can be possible with
the adoption of technology like RFID
(Radio Frequency Identification) and PSA
(Personal Shopping Assistance).
The market has enough scale to offer, and
enough desire to consume.
The consumer is ready and waiting to be
served.
The new Consumer India will pose a huge
challenge to marketers because it expects
modest prices and high benefit
expectations.
It will reward real innovators and ignore
marketing hype. Most of all, it will
continue to comprise many markets at
different stages of evolution, demanding a
One need to remember 4 A’s of
Marketing to be successful
Adaptability
Affordability
Accessibility
Awareness Value
 Thank you

Be wise Consumer to
be wise Marketer