WHAT LIES IN STORE FOR THE RETAILING INDUSTRY IN INDIA?

BY Sunil Prabhu Praveen P

Facts
India currently having about 5-12 million retail outlets all over the country. Organized retailing constitutes nearly 2% of the total retail sector whereas unorganized retailing constitutes the rest 98%. Indian retailing industry is expected to grow from the current US$350M to US$427M by 2010 and to US$635M by 2015.

ECONOMIC ENVIRONMENT Indias impressive economic growth rate of 9% Increase in population leading to growing size of the consuming class. Increase in per capita income leading to increase in purchasing power.

 Since the unorganized retail sector constitutes about 98% of the total retail sector, political parties are often quite offensive towards the growth of the organized retail business in order to protect the unorganized vendors.

TECHNOLOGICAL ENVIRONMENT The progression of IT is now aiding the growth of retail sector also. IT is now providing support to quick information processing, decision making, reduction in processing cost, real time monitoring, security of transactions etc. Implementation of SCM system & CRM are also helping in ordering & tracking inventory items, warehousing, transportation etc.

 REGULATORY ENVIRONMENT Foreign investment up to 100% is still not permitted. Real estate laws at the state level not yet clear on the issue of allowing large commercial stores. Tax structure for the retailing industry still needs to be restructured.

SUPPLIER ENVIRONMENT The biggest constraint to the growth of retail industry in India. Due to the vast geographical size of the country, presence of traditional, fragmented distribution & retailing networks and erratic logistics system and poor SCM system, reaching the customers cost-effectively is a big problem in India.

 TECHNOLOGICAL ENVIRONMENT The progression of IT is now aiding the growth of retail sector also. IT is now providing support to quick information processing, decision making, reduction in processing cost, real time monitoring, security of transactions etc. Implementation of SCM system & CRM are also helping in ordering & tracking inventory items, warehousing, transportation etc.

Opportunities
OPPORTUNITIES ECONOMIC GROWTH POSITIVE GROWTH RATE GROWING SIZE OF CONSUMING CLASS INTERNATIONAL MARKET AWARENESS MORE EXPOSURE TO INTERNATIONAL MARKETS THROUGH TV & INTERNET GROWING MARKET INCREASING NUMBER OF YOUTHS & INCREMENT IN INCOME LEVEL ADVANCING TECHNOLOGY

THREATS:
ORGANIZED RETAILERS ARE OFTEN RESISTED IN ORDER TO MAINTAIN SUPPORT FROM UNORGANIZED VENDORS REGULATORY ISSUES DIRECT FOREIGN INVESTMENT NOT PERMITTED REAL ESTATE LAWS FOR SETTING UP INFRASTRUCTURE RESTRUCTURING OF TAX WEAK SUPPLY SYSTEM DIFFICULTY IN COVERING SUCH A LARGE AREA # TRADITIONAL, FRAGMENTED DISTRIBUTION & RETAIL NETWORKS ERRATIC LOGISTICS BUYERS PSYCHOLOGY

Social Technological Demographics, Interest rates Industry focus Population Tax policies & monetary on technological growth rates, policies effort Age distribution International trade New inventions Government Labor / social regulations and and spending mobility restrictions development Contract Unemploymen Rate of enforcement law Lifestyle t policy & technology Consumer changes Taxation transfer protection Competition Information Inflation rates Fashion, hypes regulation Technology Health consciousness

Political

Economic

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