Entry of big players in Indian retail market
Chronicle Editor @ Apr 24, 2008
(This article is written by Praharsh Sharma, 2nd year Electronics. The author discusses the impact on the national economy due to entry of national and international business houses in our country’s retail market. All views expressed are his own. Praharsh is also a member of Chronicle Team. Email: praharshsharmaster@gmail.com)
The good news for Indian Retail Market is that India has recently topped the AT Kearney’s annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment. Indian Retail Market, which is now the fifth largest retail destination in the world, is estimated to grow from US $330 billion in 2008 to US $427 billion by 2010 and further to US $637 billion by 2015. Simultaneously the share of organized retail in the country, which today is just 4 percent, is estimated to climb up to 20 percent by the end of this decade. For the ill-informed, it is worth mentioning that India has 12 million (one of the largest in the world) retail outlets operating in its markets, most of which are definitely under unorganized retail.
Retail is India’s largest industry, accounting for over 10 percent of the country’s GDP (Gross Domestic Product) and around 8 percent of employment. Retail in India today however, is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. The future looks promising, the market is growing, government policies are becoming more favourable and emerging technologies are facilitating operations. The most recent matter of concern however is that, the big players like ‘Reliance Retail’, ‘Spenser’s’ and ‘Hypercity’ are going ahead with their plans of heavy investments in the Indian Retail Market. ‘Reliance Retail’ plans to setup 205 stores and ‘Spenser’s’ plan to setup 500 more stores by June 2008. ‘Hypercity’ plans another 250 stores in the country to come up within the next 5 years. Above all, is worth mentioning that the world giant ‘Wal-Mart’ has also set its eye on the Indian Retail Industry. ‘Bharti Group’ and ‘Wal-Mart’ aim to setup an equal joint venture for cash and carry business in the country.
The entry of these big players seems to be beneficial and opulent for the Indian people at the first sight, but when analyzed economically, it clearly reveals that the emerging pattern comes with more important and well pronounced drawbacks. This is because that the term ‘people’ includes all sections of the society as a whole – producers, manufacturers, consumers, middle tradesmen, wholesale dealers and last but far from the least – the small scale retail shopkeepers. Customers are no doubt, largely benefited in the cause. They need to bear low costs, get a world class shopping experience, witness the availability of all commodities under a common roof and need not worry about the quality of material, adulteration or piracy. Producers and manufacturing companies are again at a pleasure. The retail outlets have their own plans to open and operate in different parts of the country and abroad. So, in turn the producing companies find it easy to distribute and market their products through such retail chains. Their advertising and marketing work is eased and decreased. Apart from this, they get security in the market and new companies find a good platform to begin. Yet, the established ones find a better than existing system of retail outsourcing. Next however comes the plight of the middle tradesmen, wholesale dealers and small scale shopkeepers constituting the country’s unorganized retail. The pattern definitely puts them before a multi-dimensional loss. To start with, these people genuinely fear underemployment, and eventually unemployment i.e. the shut down of their business.
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