There are a host of factors that are propelling the expansion of modern retail in India, including the improving infrastructure, a move away from the socialistic pattern of economy, better educational opportunities, and rising consumerism.
Over the last couple of decades, much has been written in the Indian media about modern retailing, but the term has never been defined. FMCG companies have begun to use the words “modern trade” to describe the industry. Here again, there is a confusion. While a stand-alone supermarket chain in Mumbai gets treated as modern trade, supermarkets with monthly sales of Rs 200 crore in Jalgaon or Jalna do not. Numerous such examples are found throughout India. To the common man, this distinction may matter little, except that modern trade sells things a little cheaper and offers many discounts and schemes, but it falsifies national data about the true extent of modren retail in the country.
Since many of the Indian retailers would sooner or later like themselves to be recognised as modern retailers, they would want to know what exactly is modern retailing. The US Bureau of Labor Statistics defines modern retailing as a retail chain with 15 or more stores. In India, if a retailer follows a modern format, has a chain of stores, uses technology like computers, and employs college graduates in his working team, he can be said to be a modern retailer. Some may add one more point to this: the owner should not look into the routine day-to-day affairs of the business, leaving these to the professionals.
Listed below are some key drivers of growth in Indian modern retail:
Infrastructure: Just five or six decades ago, connectivity was a big problem in India. Forget about villages, even cities were not connected by road as there were hardly any bridges straddling major rivers. Things have since changed and are still changing fast. Express highways are being built and all cities and towns got electrified long ago. Several states even claim that they have electrified every village within their borders!
Education: Until some decades ago, well over half of the Indian population could not read and write. More than 50 percent of the districts in the country had no colleges. There was not a single engineering or medical college in several states and hardly one or two women colleges in each. But now, India boasts of the biggest English-speaking population on earth.
Industrialisation: India is the tenth biggest industrial country in the world. Instead of importing, it now exports motorcycles, cars, watches, and a wide range of industrial products.
Communication: India today has the second-largest number of mobile phones in the world, next only to China. SMS, emails, and fax are now the main mode of communication.
Media: Cable TV and hundreds of channels with news, views, and entertainment have resulted in an information explosion in India. Even the poorest man living in a slum today owns a TV set. Telephone and TV are no longer parameters of luxurious living. Now, hundreds of magazines are printed in India in all languages and read by the middle class.
Attitude: Today’s youth in the metros is having 10 to 20 pairs of dresses, half a dozen pairs of footwear and perhaps as many T-shirts. Fast-food chains like McDonald’s, KFC, and Pizza Hut are crowded with youngsters.
The result of all the above was a proliferation of small shops all over India mainly selling food grains, pulses, cooking oil, spices, dry fruits, tea and a few brands of toiletries and cosmetics. However, in the last decade or so, department stores and malls have come up in all cities and towns of India and new ones are being built every day.
About the Author
SC Misra is a consultant with several supermarket and department store chains of India. He also teaches retailing at several management institutes and has written a couple of books on the subject.