The retail sector of Indian economy is categorized into two segments such as organized retail sector and unorganized retail sector. The latter holds larger share of the retail market.
The key drives of the growth in retail consumption in India are basically
i) Clothes, Textile & Fashion Accessories
ii) Food, Grocery & General Merchandise
The top 10 companies which have the most shares in organized retail market of India are
|Name of holding company||Prime Banners|
|K Raheja Group||
|AV Birla Group||
Organized retail that has arrived in different formats as follows;
- Hyper markets
- Cash and Carry
- Discount Stores
- Department Stores
- Convenience Stores
- Neighborhood stores
- MBO (Multi-Brand Outlets)
Organized retailing in India has been largely explored in urban or in metro cities. It’s largely successful in NCR and Mumbai Region and major parts of southern portion of India. The entry of Malls, the largest form of organized retailing, which are located mainly in metro cities, in proximity to urban outskirts turned out to be a catalyst for organized retailing.
The following factors influenced the boom in the retail industry in urban areas.
- Substantial growth in purchasing power (income) of middle class people and subsequent look out for luxury items*
- Increase in customer aspiration
- Favorable Demographics
Favorable Demographics that stands in favor of people’s choice & their buying trends to prosper the organized retails are as follows:
1. Approximately 60 per cent of Indian population is below the age of 30.
2. Increasing instances of Double Incomes in most families coupled with the rise in spending power 3.Increasing use of plastic money for categories relating to Apparel, Consumer Durable Goods
4. Low share of organized retailing.
It is a big paradigm that during the boom period many successful well established groups went out of business. Subhiksha (Chennai) which was started in later 90s faced with unexpected extinct, Vishal group (Andhra Pradesh) decided to surrender, Trinethra (Hyderabad) merged with More, Fabcity opted for decent exit, and Varkeys group (Kerala) logged out unnaturally.
Further, Spencer had a closed a set of shops in Gujarat. Food World changed ownership in between two times.
Any reasons for such failure?
Blog is written by Goutam Mukherjee, Market Research Analyst of DART Consulting