Arrival of big retailers has had an impact on small grocers, but neighbourhood stores are still growing their sales, although at a much lower rate than modern trade, according to data from market research firm The Nielsen Company .
Since 2006, when most big retailers either entered the retail space or began expanding their network, sales in local kiranas have grown in the low single digits even less than the GDP growth rate, while modern trade has grown in strong double digits, though at a much lower base.
For instance, sales at modern stores grew 34 per cent in 2006 and 29.3 per cent in 2010. Traditional stores could increase sales only 1.5 per cent in 2006, but improved the growth rate to 6.2 per cent last year.
The data comes at a time the government finally moves closer to allowing multinational retailers such as Wal-Mart and Carrefour open shops in the country after several years of debates, protests and lobbying. Critics, including the Left and the BJP, say such a move will impact the livelihood of small shopkeepers and traders, but the thinking in government circles is that this will help check rising food prices by removing several layers of middlemen between farmers and consumers.
Organised retail accounts for less than 10 per cent of India’s retail market estimated at close to $400 million. The Boston Consulting Group estimates the size of organised retail market at $28 billion and expects it to grow nine times to $260 billion in 10 years.
Nielsen says Indians have embraced modern retail.
“The Indian Shopper has discovered modern retail and is increasingly shopping there,” says Nielsen’s Executive Director for Retail and Shopper Practice Dipita Chakraborty. This trend is fueled by the growth in number of modern stores, she adds.
The study shows that the frequency of consumers going to large stores has increased. More than 37 per cent consumers visited modern trade stores every month this year, up from 30 per cent last year.
Reliance Retail President Bijou Kurien attributes this to more options that big retailers offer to consumers. “In mom-and-pop stores, customer has to be very specific with what they want, but they can get more options in a modern store, and that’s where we are gaining,” he says.
Source : Economic Times
