Indian Retail: An Overview
As organised retailers carve out a bigger piece of the retail
pie for themselves its an exciting time for the retail sector. By Dominic
markets such as India and China are the final frontier for retail taking the
focus away from saturated Western markets. Since 2001, 49 global retailers entered
90 new markets, but at the same time, 17 retailers left markets in 2005.
The Indian retail industry in valued at about $300 billion and is expected to
grow to $427 billion in 2010 and $637 billion in 2015. Only three percent of
Indian retail is organised. Retailers of multiple brands can operate through
a franchise or a cash-and-carry wholesale model.
Retail is Indias largest industry, accounting for over 10 percent of the
countrys GDP and around eight percent of employment. Retail in India is
at the crossroads. It has emerged as one of the most dynamic and fast paced
industries with several players entering the market. That said, the heavy initial
investments required make break even hard to achieve and many players have not
tasted success to date. However, the future is promising; the market is growing,
government policies are becoming more favourable and emerging technologies are
Retailing in India is gradually inching its way to becoming the next boom industry.
The whole concept of shopping has altered in terms of format and consumer buying
behavior, ushering in a revolution in shopping. Modern retail has entered India
as seen in sprawling shopping centres, multi-storeyed malls and huge complexes
offer shopping, entertainment and food all under one roof.
The Indian retailing sector is at an inflexion point where the growth of organised
retail and growth in the consumption by Indians is going to adopt a higher growth
trajectory. The Indian population is witnessing a significant change in its
demographics. A large young working population with median age of 24 years,
nuclear families in urban areas, along with increasing working-women population
and emerging opportunities in the services sector are going to be the key growth
drivers of the organised retail sector.
Initially, this was about Indian corporate houses rolling out malls and supermarkets,
but with Wal-Mart coming into the Indian market, the era of the superstore is
dawning. Unlike the kirana stores that served us for decades, this new breed
of retail chains is heavily dependent on IT.
Wal-Mart, the worlds largest retailer, and Bharti Enterprises have signed
a Memorandum of Understanding (MoU) to explore business opportunities in the
Indian retail industry. This joint venture will mark the entry of Wal-Mart into
the Indian retailing industry.
The biggest competitor for Bharti-Wal-Mart is likely to be Reliance Retail,
the retail wing of Reliance, which had planned to establish 10,000 stores by
2010. It had already opened 11 pilot stores under the Reliance Fresh
format in Hyderabad.
All these trends and developments present a great business opportunity for software
and hardware vendors from across the globe. Indian solution providers are targeting
this segment have reason to rejoice. For while organised retail occupies a miniscule
two to three percent of the overall Indian retailing industry, that is poised
In spite of the prospects being good things arent quite as rosy when it
comes to awareness of IT systems. In most cases, organised retailers in India
have installed solutions that help them automate transactional systems.
With the retail sector in India undergoing a transformation
due to the entry of large corporate houses, IT managers and CIOs are now looking
forward to know how IT can help them achieve the business goals of their organisations.
Standards-based architecture and software support all kinds of mission-critical
IT applications for enabling greater efficiency, significant cost savings, and
new business value. The critical activities that can be handled by IT are finance
and accounting, business intelligence, vendor development and management, supply
chain management, merchandising and inventory management, facilities management,
stores management, customer relationship management, branding, marketing, sales
promotion and HR.
Like any other vertical, retail also stands to benefit from elaborate IT set-ups.
However, this is subject to the scale and size of the organisation, as well
as an objective assessment of its requirements. Key common challenges that can
be tackled through IT implementations include accurate merchandising, improved
planning, increasing profitability, enhancing customer experience, strengthening
store operations, improved workforce management, and improving the supply chain.
This is in fact one of the key imperatives facing retailers in India, to have
a robust and scalable supply chain that will facilitate rapid growth.
Since a basic objective is to make data available to users and customers, proper
IT implementation and superior IT infrastructure ensure that in spite of getting
minimal details, the retailer captures the right information, which flows to
everyone from the back office staff to the head office managers. The entire
information flow must be seamless. A retail business works on a network environment
because the stores connect to one another as well as to supplier sites. This
is because in the retail business quick response is the key to success. Proper
IT implementation also ensures that investment in retail reduces substantially.