Barriers to Employment
India's fiscal deficit and its capital distortions, restrictive labor laws, and poor infrastructure are the most important barriers to rapid growth. However, research shows that the most important problems are product and land market barriers, and India's ability to absorb the imminent surge of the working age population.
Challenges facing Indian retail industry
•The tax structure in India favors small retail business
•Lack of adequate infrastructure facilities
•High cost of real estate
•Dissimilarity in consumer groups
•Restrictions in Foreign Direct Investment
•Shortage of retail study options
•Shortage of trained manpower
•Low retail management skill
Will Rural Retail Catch up fast ???
Rural India, which accounts for more than 70 per cent of the country's one billion population (according to the Census of India 2001), is not just witnessing an increase in its income but also in consumption and production.The rural retail market is currently estimated at US$ 112 billion, or around 40 per cent of the US$ 280 billion Indian retail market, according to a study paper, 'The Rise of Rural India', by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Major domestic retailers like AV Birla, ITC, Godrej, Reliance and many others have already set up farm linkages. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh, Project Shakti (Hindustan Unilever) and Naya Yug Bazaar have established rural retail hubs.
Rural retail was supposed to cash in on the prosperity of Bharat, but the storyline hasn’t really gone the way big corporate houses had hoped.While some have chosen to wind up business, others have preferred to go slow due to a host of reasons.
Such stores offer products like agri-inputs, cattle feed, plastic furniture, FMCG products, automobiles, banking, crop insurance and other agronomical services.
Setting up an organised retail business in rural towns proved to be challenging. Companies have faced problems with regard to infrastructure, distribution, fluctuating rural incomes and stiff competition from local kirana stores, which operate at much lower costs. However, these factors did not deter companies such as DCM Shriram Consolidated Ltd (DSCL), ITC, Godrej and Triveni Engineering from investing in rural retail.
However, recently, Triveni decided to shut its 42 stores after its retail venture incurred losses of about Rs 19 crore in over five years of operations. The company had not expanded the number of outlets for the past two years. DSCL, with 300 retail outlets under the Hariyali Kisaan Bazaar brand, did not expand in 2009-10. It is not looking to increase the number in 2010-11, either. Over the last four years, they have grown the business 10-fold to around 300 outlets. Having achieved a critical mass, the company in 2010-11 is focusing on consolidation.
The erratic monsoon in the last kharif season had affected farm incomes. However, rural incomes have gone up consistently over recent years, on regular increase in the support price of crops like wheat, paddy and sugarcane. More, farm income is not taxed.
As rural retail does not have any benchmarks to follow, we have to keep innovating. Like all retail formats, rural retail also had a slowdown and is now looking at focusing on making its individual formats work. With improvement in the market sentiment after a satisfactory rabi season in 2009, we can expect the markets to improve.
Some ray of hope at the end of the tunnel
The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore by the year 2010.
India's fiscal deficit and its capital distortions, restrictive labor laws, and poor infrastructure are the most important barriers to rapid growth. However, research shows that the most important problems are product and land market barriers, and India's ability to absorb the imminent surge of the working age population.
Challenges facing Indian retail industry
•The tax structure in India favors small retail business
•Lack of adequate infrastructure facilities
•High cost of real estate
•Dissimilarity in consumer groups
•Restrictions in Foreign Direct Investment
•Shortage of retail study options
•Shortage of trained manpower
•Low retail management skill
Will Rural Retail Catch up fast ???
Rural India, which accounts for more than 70 per cent of the country's one billion population (according to the Census of India 2001), is not just witnessing an increase in its income but also in consumption and production.The rural retail market is currently estimated at US$ 112 billion, or around 40 per cent of the US$ 280 billion Indian retail market, according to a study paper, 'The Rise of Rural India', by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Major domestic retailers like AV Birla, ITC, Godrej, Reliance and many others have already set up farm linkages. Hariyali Kisan Bazaars (DCM) and Aadhars (Pantaloon-Godrej JV), Choupal Sagars (ITC), Kisan Sansars (Tata), Reliance Fresh, Project Shakti (Hindustan Unilever) and Naya Yug Bazaar have established rural retail hubs.
Rural retail was supposed to cash in on the prosperity of Bharat, but the storyline hasn’t really gone the way big corporate houses had hoped.While some have chosen to wind up business, others have preferred to go slow due to a host of reasons.
Such stores offer products like agri-inputs, cattle feed, plastic furniture, FMCG products, automobiles, banking, crop insurance and other agronomical services.
Setting up an organised retail business in rural towns proved to be challenging. Companies have faced problems with regard to infrastructure, distribution, fluctuating rural incomes and stiff competition from local kirana stores, which operate at much lower costs. However, these factors did not deter companies such as DCM Shriram Consolidated Ltd (DSCL), ITC, Godrej and Triveni Engineering from investing in rural retail.
However, recently, Triveni decided to shut its 42 stores after its retail venture incurred losses of about Rs 19 crore in over five years of operations. The company had not expanded the number of outlets for the past two years. DSCL, with 300 retail outlets under the Hariyali Kisaan Bazaar brand, did not expand in 2009-10. It is not looking to increase the number in 2010-11, either. Over the last four years, they have grown the business 10-fold to around 300 outlets. Having achieved a critical mass, the company in 2010-11 is focusing on consolidation.
The erratic monsoon in the last kharif season had affected farm incomes. However, rural incomes have gone up consistently over recent years, on regular increase in the support price of crops like wheat, paddy and sugarcane. More, farm income is not taxed.
As rural retail does not have any benchmarks to follow, we have to keep innovating. Like all retail formats, rural retail also had a slowdown and is now looking at focusing on making its individual formats work. With improvement in the market sentiment after a satisfactory rabi season in 2009, we can expect the markets to improve.
Some ray of hope at the end of the tunnel
The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The India retail industry is expected to grow from Rs. 35,000 crore in 2004-05 to Rs. 109,000 crore by the year 2010.
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