The document discusses the rise of organized retailing in India. It provides background on the Indian retail industry and how it has traditionally been dominated by small, unorganized stores. However, in recent years organized retail has grown rapidly due to changes in consumer preferences and demand for improved shopping experiences. The growth of organized retail is expected to benefit the Indian economy in several ways, including by improving prices and supply chains for farmers, boosting small and medium enterprises, increasing employment, and contributing to overall economic growth and productivity. While some jobs may be displaced, organized retail also creates many new, higher quality positions.
AN EMPIRICAL STUDY ON ORGANIZED RETAIL OUTLET AND CONSUMER PERCEPTION TOWARDS...IAEME Publication
The Indian Retail Industry is divided into Organized and Unorganized Sectors. Traditional markets are making way for organized formats such as Departmental Stores, Hypermarkets, Supermarkets and Specialty Stores. Indian Retail Industry contributes over 10% of the country’s GDP. Strong income growth, changing lifestyles, and favorable demographic patterns, suggest that by 2020, the Modern Retail Industry in India will be worth US$ 275-400 billion. This study was undertaken, considering three competitive Retail Chain Outlets, Big Bazaar, Reliance Fresh and Marks Spencers, to evaluate the consumers’ opinion and preferences towards these outlets. The study also highlights the pros and cons of the outlets considered and the level of satisfaction compared to the Local Retail Outlets.
AN EMPIRICAL STUDY ON ORGANIZED RETAIL OUTLET AND CONSUMER PERCEPTION TOWARDS...IAEME Publication
The Indian Retail Industry is divided into Organized and Unorganized Sectors. Traditional markets are making way for organized formats such as Departmental Stores, Hypermarkets, Supermarkets and Specialty Stores. Indian Retail Industry contributes over 10% of the country’s GDP. Strong income growth, changing lifestyles, and favorable demographic patterns, suggest that by 2020, the Modern Retail Industry in India will be worth US$ 275-400 billion. This study was undertaken, considering three competitive Retail Chain Outlets, Big Bazaar, Reliance Fresh and Marks Spencers, to evaluate the consumers’ opinion and preferences towards these outlets. The study also highlights the pros and cons of the outlets considered and the level of satisfaction compared to the Local Retail Outlets.
There has been a tremendous amount of
literature and discussion on retail formats and present concern
seems to be the viability of various formats, particularly in
the Indian context. Whereas the idea of retailing has caught
up the fancy of corporate investors including some of the big
names in the Indian corporate world, and many of them have
diversified, integrated and changed various operating
parameters with respect to improving the service efficiency and
quality, the main question remains as to the profitable
operating format, size and display characteristics.
Transferring and applying manufacturing principles and
practices to improve both service efficiency and service
quality is an important area of research in service operations.
Research work advances this stream of research by examining
the compatibility of operating efficiency and service quality.
Specifically, our research paper addresses the following
questions: Do operating efficiency and service quality have to be
traded off, or can they exist in unison (are they compatible)
What aspects of service quality have a stronger association
with operating efficiency? How synergies from a combination of
retail formats can be used to optimize profitability of retail
operations? Overall, our analyses suggest important strategic
decision-making implications for service operations managers
and provide novel insights for academic research.
Whereas the operating margins and profits have not given
any incentive for promoters to invest in organized retail
business, the Indian retailers have been on the lookout for a
successful formula for increasing margins and profits. The
future of Indian retailing will hinge on finding a suitable
answer by any means: Be it a joint venture or cooperative
effort; or an integrated effort with the participation of
multiple retailers under one roof and making use of synergies
and cost efficiencies to improve bottom lines – which
incidentally is the most important concern of organized retail
industry. The future of Indian retailing in the organized
formats is still a question mark; but as the industry goes through
the evolutionary process we need to wait and see what the
future holds for this upcoming industry as it is promising for
employment opportunity! Developments in social centric
marketing techniques and social networking will have a profound
influence
The study of Factors Affecting Consumer Preferences of Shopping at Organized ...IJAEMSJORNAL
The organized retail sector has experienced profound shift in the last decade due to change in the social, cultural & business environment. The primary focus of this research paper is consumer behavior & their shift towards organized retail shopping from traditional unorganized retail shopping taking into consideration of their purchasing pattern as well as shift in their perception which changes during their course of organized retail shopping experience. And also to check the hypothesis that the consumers prefer organized retail because of heavy discounts, ease of access and service delivery.This paper also highlights the challenges faced by retail industry.
CUSTOMER BUYING BEHAVIOUR AT PANTALOONSSrihari Reddy
Customer Buying Behavior is the study of individuals and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. Customer behavior is increasingly a part of strategic planning for the future investment and growth of any industry. Retail industry or precisely to say apparel industry is no exception.
Study of Consumer Purchase Behaviour in the Context of Organized Retail Outletspaperpublications3
Abstract: The retail industry of India has become one of the most dynamic industries in the global market with the entry of several new players. Moreover, it accounts for over ten per cent of India’s Gross Domestic Product (GDP) and contributes about eight per cent to the country’s employment, making it the world’s fifth-largest destination in retail space. This research focuses on investigating the relationship between employee behavior and consumer purchase intention and to assess the service quality of Reliance Fresh Stores in Delhi/NCR. The retail industry of India has become one of the most dynamic industries in the global market with the entry of several new players. Moreover, it accounts for over ten per cent of India’s Gross Domestic Product (GDP) and contributes about eight per cent to the country’s employment, making it the world’s fifth-largest destination in retail space.
Keywords: Consumer, Purchase, Behaviour, Organized retail, Reliance, Consumption, FMCG.
Title: Study of Consumer Purchase Behaviour in the Context of Organized Retail Outlets
Author: Dr. Aparna Goyal
ISSN 2349-7807
International Journal of Recent Research in Commerce Economics and Management (IJRRCEM)
Paper Publications
There has been a tremendous amount of
literature and discussion on retail formats and present concern
seems to be the viability of various formats, particularly in
the Indian context. Whereas the idea of retailing has caught
up the fancy of corporate investors including some of the big
names in the Indian corporate world, and many of them have
diversified, integrated and changed various operating
parameters with respect to improving the service efficiency and
quality, the main question remains as to the profitable
operating format, size and display characteristics.
Transferring and applying manufacturing principles and
practices to improve both service efficiency and service
quality is an important area of research in service operations.
Research work advances this stream of research by examining
the compatibility of operating efficiency and service quality.
Specifically, our research paper addresses the following
questions: Do operating efficiency and service quality have to be
traded off, or can they exist in unison (are they compatible)
What aspects of service quality have a stronger association
with operating efficiency? How synergies from a combination of
retail formats can be used to optimize profitability of retail
operations? Overall, our analyses suggest important strategic
decision-making implications for service operations managers
and provide novel insights for academic research.
Whereas the operating margins and profits have not given
any incentive for promoters to invest in organized retail
business, the Indian retailers have been on the lookout for a
successful formula for increasing margins and profits. The
future of Indian retailing will hinge on finding a suitable
answer by any means: Be it a joint venture or cooperative
effort; or an integrated effort with the participation of
multiple retailers under one roof and making use of synergies
and cost efficiencies to improve bottom lines – which
incidentally is the most important concern of organized retail
industry. The future of Indian retailing in the organized
formats is still a question mark; but as the industry goes through
the evolutionary process we need to wait and see what the
future holds for this upcoming industry as it is promising for
employment opportunity! Developments in social centric
marketing techniques and social networking will have a profound
influence
The study of Factors Affecting Consumer Preferences of Shopping at Organized ...IJAEMSJORNAL
The organized retail sector has experienced profound shift in the last decade due to change in the social, cultural & business environment. The primary focus of this research paper is consumer behavior & their shift towards organized retail shopping from traditional unorganized retail shopping taking into consideration of their purchasing pattern as well as shift in their perception which changes during their course of organized retail shopping experience. And also to check the hypothesis that the consumers prefer organized retail because of heavy discounts, ease of access and service delivery.This paper also highlights the challenges faced by retail industry.
CUSTOMER BUYING BEHAVIOUR AT PANTALOONSSrihari Reddy
Customer Buying Behavior is the study of individuals and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. Customer behavior is increasingly a part of strategic planning for the future investment and growth of any industry. Retail industry or precisely to say apparel industry is no exception.
Study of Consumer Purchase Behaviour in the Context of Organized Retail Outletspaperpublications3
Abstract: The retail industry of India has become one of the most dynamic industries in the global market with the entry of several new players. Moreover, it accounts for over ten per cent of India’s Gross Domestic Product (GDP) and contributes about eight per cent to the country’s employment, making it the world’s fifth-largest destination in retail space. This research focuses on investigating the relationship between employee behavior and consumer purchase intention and to assess the service quality of Reliance Fresh Stores in Delhi/NCR. The retail industry of India has become one of the most dynamic industries in the global market with the entry of several new players. Moreover, it accounts for over ten per cent of India’s Gross Domestic Product (GDP) and contributes about eight per cent to the country’s employment, making it the world’s fifth-largest destination in retail space.
Keywords: Consumer, Purchase, Behaviour, Organized retail, Reliance, Consumption, FMCG.
Title: Study of Consumer Purchase Behaviour in the Context of Organized Retail Outlets
Author: Dr. Aparna Goyal
ISSN 2349-7807
International Journal of Recent Research in Commerce Economics and Management (IJRRCEM)
Paper Publications
With the emergence of supermarkets, kirana stores have been depleting day by day. Government is in the grave situation to decide whether to allow 50% FDI or not in the retail sector. There are certain retail outlets such as Walmart, Metro which are better in quality, cheaper in rates, and offering a range and variety of products under one roof. These malls have entered in India but they are into cash and carry business only and not in the multi brand retail sector. Many of them have entered through joint ventures. If government allow them to enter in India, it can be said that all the small shops and kirana stores will not be able to stand in the market. They cannot compete with them. Now the question arise how the kirana stores can be saved from these big giants in the market. It is the need of the hour today to save these kirana stores because in a developing country like India where the income of an average man is low, such types of small business can make them able to earn their living. The present research is an attempt to find out the weaknesses of kirana stores as compared to the malls and to find out the solutions for the betterment of the stores. The research is conducted on various kirana stores in Punjab. The study identifies the problems being faced by kirana merchants such as recovery of credit, inventory management, goodwill in terms of quality, low space, and lack of variety etc. But during the research it has been found out that there are certain areas where these kirana stores have an edge over the market such as emotional attachment with the customer, to fulfil the timely need of credit of the customer, easy availability etc. It is concluded that both kirana stores and malls are important to the Indian economy. FDI is important for the growth of the economy but it should come for the rescue of the existing business and not as a threat. Secondly government intervention is seeked to make improvements in the functioning of the kirana stores. If kirana stores starts using their strategic advantages to the optimum level, they can make can make their existence strong in the market.
Current scenario in retail marketing with special reference to organised reta...RAVICHANDIRANG
The Indian retail industry has scaled impeccable growth over the last decade with an amiable acceptance to organized retailing formats. The industry is maturing towards modern concept of retailing, cornering the conventional unorganized family-owned business. India has been ranked as the fourth most attractive nation for retail investment among 30 emerging markets. With market liberalization, growing consumerism and the entry of corporate players, the Indian retail sector is currently experiencing developments at an evolutionary rate like nowhere else in the world. This article consists of the following objectives such as To assess the progress ,analyse the opportunities know FDI scenario ,and To study the regulatory frame work of organized retail marketing.
2. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)
ISSN 2248 – 9398(Online), Volume 1, Number 2, May-October (2011)
formats like departmental stores, hypermarkets, supermarkets and specialty stores are
swiftly replacing the traditional formats dramatically altering the retailing landscape in
India. India is the third-most attractive retail market for global retailers among the 30
largest emerging markets, according to US consulting group AT Kearney’s report
published in June 2010.
According to the 8th Annual Global Retail Development Index (GRDI) of AT Kearney,
India retail industry is the most promising emerging market for investment. In 2007, the
retail trade in India had a share of 8-10% in the GDP (Gross Domestic Product) of the
country. In 2009, it rose to 12%. It is also expected to reach 22% by 2010.According to a
report by Northbride Capita, the India retail industry is expected to grow to US$ 700
billion by 2010. By the same time, the organized sector will be 20% of the total market
share. It can be mentioned here that, the share of organized sector in 2007 was 7.5% of
the total retail market.
The retail industry in India is currently growing at a great pace and is expected to go up
to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the
year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer
spending has also gone up and is also expected to go up further in the future. In the last
four year, the consumer spending in India climbed up to 75%. As a result, the India retail
industry is expected to grow further in the future days. By the year 2013, the organized
sector is also expected to grow at a CAGR of 40%.
The prime reasons that fuelled this boom include
• Favourable demographics,
• Rising consumer incomes,
• Real estate developments,
• Especially the emergence of new shopping malls, availability of better sourcing
options - both from within India and overseas - and
• Changing lifestyle.
Evolution and growth of Organized Retailing in India
Organized retail in India, today holds only a fraction (6%) of the market share potential in
India. It has risen from ZERO to 6% in a very short period mainly on Volumes and not a
value-driven growth. The Bazaar shopping concept has retained its identity and character
while the modern-day shopping structures represent an inspired fusion of main street
shopping along with community centric activity. Today we are re-visiting the Origin and
History of Organized retailing in India.The emergence of organized retail in India dates
back to the pre-independence era when the country’s established business houses, mostly
textile majors, ventured into the retail arena through company-owned or franchisee
outlets. There were also exclusive tailoring shops, that ultimately expanded their span of
operations to become leading regional fashion retailers - Mumbai’s Charagh Din,
Kolkata’s Burlington, Delhi’s Mohanlal Sons and Bangalore’s PN Rao, to name a few. It
is worth a mention that southern India took the lead to establish the first organized retail
chains in the food and grocery (F&G) segment in India, with stores such as Nilgiri’s,
Foodworld, Margin Free, etc. The consumer durables segment too has its roots in the
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3. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)
ISSN 2248 – 9398(Online), Volume 1, Number 2, May-October (2011)
south with regional players likeViveks, Giria’s, Pai International, etc. India's first
500,000 sq.ft. shopping centre from Mangal Tirth Estate called Spencer Plaza, came up
in Chennai in 1990.
Organised Retailing
In a sharp contrast to the retail sector in developed economies, retailing in India - though
large in terms of size - is highly fragmented and unorganized. With close to 12 million
retail outlets the country has one of the highest retail densities worldwide. Retailers
include street vendors, supermarkets, department stores, restaurants, hotels and even two-
wheeler and car showrooms. Counter stores, kiosks, street markets and vendors, where
the ownership and management rest with one person, are classified as traditional or
unorganised retail outlets. These formats typically require employees with low skills and
account for around two-thirds of the sector's output. These are highly competitive outlets,
with minimal rental costs (unregistered kiosks or traditional property), cheap labour
(work is shared by family members) and negligible overheads and taxes.
The modern Indian consumer is seeking more value in terms of improved availability and
quality, pleasant shopping environment, financing options, trial rooms for clothing
products, return and exchange policies and competitive prices. This has created a rapidly
growing opportunity for organized, modern retail formats to emerge in recent years and
grow at a fast pace. Inefficiency in the existing supply chains presents further opportunity
for organized players to draw on this large market even as lack of consumer culture and
low purchasing power restricted the development of modern formats. Migration from
unorganized to organized retail has been visible with economic development in most
countries. The Indian organized retail industry is valued at about $300 billion and is
expected to grow to $427 billion in 2010 and $637 billion in 2015. Retail Market India
today is the second fastest growing economy of the world after China. Indian economy
will grow larger than Britain's by 2022, Japan by 2032 and by 2050 will become the
second largest economy of the world after China. Indian market has become the most
lucrative market for retail investment in the world. Some of the factors which have
contributed to the growth of organized retail in India are: increase in the purchasing
power of Indians, rapid urbanization, increase in the number of working women, large
number of working young population.
Today people look for better quality product at cheap rate, better service, better ambience
for shopping and better shopping experience. Organized retail promises to provide all
these. The Industry The various formats of organized retail are: Hypermarkets: They
store products of multiple brands comprising food items and non-food items.
Supermarkets: These are self service stores selling food and personal care products. E.g.:
Subhiksha. Departmental stores: Retails branded goods in non-food categories. E.g.:
Shoppers Stop. Specialty Chains : These stores focuses on a branded product or a product
category. E.g.: Bata Convenience stores: These are small self service outlet located in
crowded urban area. Malls: A huge enclosures which has different retail formats. e.g.:
Nucleus Key players in organised retail are: Pantaloon Retail: It was started by Kishore
Biyani- India's largest retailer. The various formats of pantaloon retail are: Pantaloons,
Big Bazaar, Food Bazaar, Central etc. RPG Retail: Its various formats are: Food World,
Music World, Health & Glow, Spencer's Tata Retail (known as TRENT): Its various
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4. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)
ISSN 2248 – 9398(Online), Volume 1, Number 2, May-October (2011)
formats are: CromaWestsideStar India Bazaar K Raheja Corp. Group: Shoppers' Stop,
Hypercity, Crossword, In Orbit Mall Reliance Retail Job Opportunities: Retail accounts
for 8% employment in the country. In the next 2 years the sector is set to provide 2.5 lakh
job opportunities.
Organized Retailing: Advantages to the Indian Economy
India’s Planning Commission, in its Approach Paper for the Eleventh Five Year Plan,(2006,
pp.27-8) has noted:“Organized retailing brings many advantages to producers and also to
urban consumers, while also providing employment of a higher quality.
Agriculture
Organized retailing in agricultural produce can set up supply chains, give better prices to
farmers for their produce and facilitate agro-processing industries. Modern retailing can bring
in new technology and reduce consumer prices, thus stimulating demand and thereby
providing more employment in production.”Indian agriculture is in the midst of a grave crisis
with its growth rate steadily falling to just 2.5 per cent per annum during 2000-07, as against
an annual growth rate of 4.2 per cent during the 1980s and 3.2 per cent during the 1990s.
Among the reasons for the secular downtrend of this sector are: (a) low level of investment in
the sector of just below 2 per cent of GDP (Economic Survey 2006-07, p. 176) for the past
decade and a half; (b) inability to bring a larger share of land under irrigation in the past ;
(c)lack of any significant breakthrough in yields for the last few decades; and (d) the dismal
state of rural infrastructure, such as power, roads, transport, marketing, etc. While the
industrial and services sectors are largely free from the controls of the license raj, agriculture
remains constrained by a series of restrictions from input supply and production to marketing
and distribution. The problem in agriculture is reflected to a certain extent in the operation of
the APMC Acts (Agriculture Produce Marketing Committees)in various states and union
territories. The APMC Acts were originally intended to protect farmers from exploitation by
intermediaries and traders by ensuring that they receive reasonable prices and timely
payment. Over a period of time, the government regulated markets failed to function the way
they were intended to and farmers felt exploited with a lack of transparency in the pricing,
weighing bagging and payments for their produce. The various intermediaries in the system
from the village trader, who acts as a consolidator, commission agent, wholesaler, sub-
wholesaler, etc have been appropriating a large part of the final price in the form of margins
and commissions. Organized retailers have already started procuring fruit and vegetables
from farmers directly bypassing the various intermediaries who add more costs than value to
the food chain. They are investing heavily on logistics in the form of centralized warehousing
and distribution centres, transport and cold storage, either directly or through engaging third
party logistics companies. They are also employing a large number of unskilled workers for
sorting, grading, packaging and labelling. All these will enhance farmer’s realizations,
improve quality of products at the shop and reduce the ultimate consumer price.With regard
to agriculture, organized retailing will work with farmers to: (i) improve yields by enabling
them to obtain quality input supplies; (ii) adopt superior farm technology and practices; and
(iii) access timely credit at reasonable rates. Organized retailing will offer the farmer an
alternative market which is more transparent, and less time consuming. It will provide
prompt payment, avoid margins for unproductive intermediaries, and ensure remunerative
prices.
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5. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)
ISSN 2248 – 9398(Online), Volume 1, Number 2, May-October (2011)
Manufacturing
The Planning Commission has identified four sectors as the major employment generating
sectors for the Eleventh Plan period, 2007-12. They are: (i) food processing industry; (ii)
textiles and clothing; (iii) tourism; and (iv) construction. Of these sectors, all except tourism
are getting a fillip with the growth of organized retail. Currently, both the food-processing
and textile industries are lagging behind. It is particularly the small and medium industry
(SMI) sector which will gain advantages with the emergence of organized retailers by
becoming their suppliers. Modern retail will catalyze the development of the SMI sector in
the country. As regards manufacturing, SMIs particularly in food-processing, textiles and
clothing will get a tremendous boost by producing for the big organized retail companies and
will grow along with the organized retail business. The tie-up with organized retail will drive
these industries to become more efficient in order to meet the stringent delivery conditions of
the retail market. Private labelling is the creation of brands in the name of modern retailers. It
has already begun in India in the food and grocery, and apparel segments and is expected to
expand rapidly. Small-scale manufacturers will be the major beneficiaries of private labels.
In short, organized retailing will remove various inefficiencies that characterize the present
Indian distribution system, which in turn will provide better price for the farmers and
suppliers on the one hand, and lower prices for consumers, on the other.
Exports
Organized retail’s link with exports comes through foreign players. International retailers
look for sources around the world and a country in which they operate becomes a source for
their global sales. Some of the international retailers that have plans for India in the future
have already developed suppliers in the country and have started exporting from India. For
example, Wal-Mart exported an equivalent of US$ 600 million, and IKEA about 380 million
Euros from India in 2006-07.
Growth and Productivity
Organized retail has the potential to lift the Indian economy to higher levels of productivity
and growth. In the context of the United States, a McKinsey Global Institute study indicated a
contribution by the retail sector of nearly one-fourth of the rise in productivity growth from
1987-95 to 1995-99. In India, organized retail will raise productivity and growth by pulling
up the current lagging sectors, such as agriculture, food-processing industry, and textiles.
Besides, in order to meet the rapidly growing demand for retail space, construction of real
estate is taking place at a fast pace. It is interesting to note that construction has been one of
the fastest-growing segments of India’s GDP in recent years, recording an average annual
real growth of about 13 per cent during 2003-07. An important point to be noted is that while
the jobs that organized retail displaces are the low-end, low-quality, underproductive ones,
the new jobs created are the high quality, productive ones. It also generates a number of jobs
for unskilled labour for the tasks of sorting, grading, labelling, etc.
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ISSN 2248 – 9398(Online), Volume 1, Number 2, May-October (2011)
Impact on Employment and Prices
Employment in India is distributed in a skewed manner towards agriculture. Though the
share of agriculture (including forestry and fishing) in GDP came down from 28.9per cent in
1993-94 to 18.8 per cent in 2004-05, its share in employment remained huge, coming down
gradually from 61 per cent to 52.1 per cent during the same period. The strength of workforce
engaged in agriculture had been about 201 million in 2004-05. This is, in fact, a reflection of
the lack of employment opportunities in the non-agricultural sectors. The industry’s share in
employment went up from 15.9 per cent in 2003-04 to 19.4 per cent in 2004-05 which is
somewhat better than the rise in its share in GDP from 25.9 to 27.5 per cent during the same
period. The share of services in GDP rose sharply from 45.2 per cent in 1993-94 to 53.7 per
cent in 2004-05 but its share in employment grew somewhat slowly from 23.1 per cent to
28.5 per cent during the same period. Within the services sector, the share of trade (both retail
and wholesale included) in GDP rose from 11.9 per cent in 1993-94 to 14.9 per cent in 2004-
05, but its share in employment grew marginally from 7.7 per cent to 8.4 per cent during the
same period. The trade sector, particularly retail, is predominantly the unorganized “mom-
and-pop” shops.
The growth of organized retail will enhance the employment potential of the Indian economy.
While providing direct employment in retail, it will drive the growth of a number of activities
in the economy which in turn will open up employment opportunities to several people. This
includes the small manufacturing sector especially food-processing, textiles and apparel,
construction, packing, IT, transport, cold chain, and other infrastructure. It may adversely
affect employment in unorganized retail and the trade intermediaries associated with the
traditional supply channels but the additional jobs created will be much higher than those that
are lost.
Organized retail’s direct purchase from farmers and other suppliers compresses the supply
chain and eliminates a large number of intermediaries and hence can offer consumers a lower
price than the traditional channels. This has a subduing effect on inflation in the economy.
Besides inflation, high volatility of prices of certain essential commodities, such as onions,
sugar, tomatoes is an essential feature of the Indian economy. The spread of retail can
mitigate price volatility of essential commodities by making them available throughout the
year.
Improvement of Government Revenues
Another significant advantage of organized retailing is its contribution to government
revenues. Unorganized retailers normally do not pay taxes and most of them are not even
registered for sales tax, VAT, or income tax. Organized retailers, by contrast, are corporate
entities and hence file tax returns regularly. The growth of organized retail business will be
associated with a steady rise in tax receipts for the central, state, and local governments. The
growth of organized retail will enhance the employment potential of the Indian economy.
While providing direct employment in retail, it will drive the growth of a number of activities
in the economy which in turn will open up employment opportunities to several people. This
includes the small manufacturing sector especially food-processing, textiles and apparel,
construction, packing, IT, transport, cold chain, and other infrastructure. It may adversely
affect employment in unorganized retail and the trade intermediaries associated with the
traditional supply channels but the additional jobs created will be much higher than those that
are lost. An important point to be noted is that while the jobs that organized retail displaces
23
7. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)
ISSN 2248 – 9398(Online), Volume 1, Number 2, May-October (2011)
are the low-end, low-quality, underproductive ones, the new jobs created are the high quality,
productive ones. It also generates a number of jobs for unskilled labour for the tasks of
sorting, grading, labelling, etc. Organized retail’s direct purchase from farmers and other
suppliers compresses the supply chain and eliminates a large number of intermediaries and
hence can offer consumers a lower price than the traditional channels. This has a subduing
effect on inflation in the economy. Besides inflation, high volatility of prices of certain
essential commodities, such as onions, sugar, tomatoes is an essential feature of the Indian
economy. The spread of retail can mitigate price volatility of essential commodities by
making them available throughout the year.
CONCLUSION
In this paper it is established that the growth of modern retailing i.e. the organized
retailing in India has tremendous impact on the country. The growth of organized
retailing has led to the growth of the country in aspects of agriculture, manufacturing,
exports, increase in the revenue of the government. Hence it could be concluded with the
statement that in future it lead to more prosperity and development of the country.
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