The report highlights that retail sector will get a transformational push with an aggressive collaboration between the organized, unorganized and online retail growth, driven by India’s demographics with huge young and tech savvy population (500 million below 25 years), rising incomes and demand levels, urbanisation, attitudinal shifts and above all, a phenomenal and continuous rise in internet penetration across the country with the government’s commitment to digitization”.
“It is estimated there would be 550 million net users in India by 2018, as also the face of the Internet user will change dramatically, with higher penetration to the tune of 210 million in rural areas. The online retail would provide a superb platform to the unorganised retail to reach out to the consumers across markets in tier 3 & tier 4 cities”,
Retail Marketing in Rural India – Factors in Favour and StrategiesDr. Amarjeet Singh
Retail industry now accounting for 10% of the
country’s GDP undergoes dynamic changes boosting its
growth still further. The sector grows impressively leading
to production of wide range of products and services.
Rural markets provide great scope for marketers due to
increased revenue and purchase power of the rural
population in India. The rural income is expected to
increase faster due to government policies supporting
agriculture and the earning population that has
temporarily moved out of rural villages to cities for
employment in non-agricultural sectors. Technology in
agriculture has helped to produce quality crops and the
market is ready to give high prices for such products.
Around 60% of the students in the colleges are first
generation graduates who have moved out of their villages
for tertiary education. Thus the life style, likes and
preferences of the rural population keeps changing.
However the huge rural segment is much different from
that of the urban segment and the marketers need to
approach with sustained efforts and special models. The
highly fragmented rural segment’s needs are majorly filled
by unorganized family run Kirana stores and Maligai
shops. The share of organised retail in the country has
risen by 60% and the same is expected to have impact on
the rural market as well. The paper focuses on the growth
of retail market in India, the emerging factors in favour of
rural retail and suggests strategies for rural retailing.
Ground Zero 4.0 | Scaling Up - Event ReportRedSeer
Executive Summary
The report is compiled of all the topics that were discussed at Ground Zero 4.0 and has been
segregated based on RedSeer’s research and panel inputs.
Key Findings:
1. Digital India
2. Retail
3. D2C
4. Education
5. Healthcare
6. Grocery
7. Etailing
eCommerce platforms shipped ~2.5 billion shipments in
FY2020 growing at ~50%+ CAGR in the last 3 years. However,
we expect shipment volume to grow at ~30-35% CAGR for next
5 years.
Some of the key drivers of growth for eCommerce are the
latent demand in Tier-2+ cities, enablement of logistics
networks, infrastructure built by eCommerce platforms (large
horizontals), and new age third-party logistics players in
the last 3-4 years. The investment in logistics networks and
infrastructure has enabled eCommerce platforms to reach
online shoppers beyond metro and tier-1 cities to hinterland in
the country
Prettysecrets.com- A Women Fashion Ecommerce Private LimitedAnkur Suyal
This is one of my internship report with prettysecrets (MTC Ecom Pvt Ltd),Mumbai. Although I didn't have any specific project, I have worked on different areas. During my internship, I worked on three different small projects and hence, the above report contains those study.It was a great experience for me. I hope you will like it.
There has been a sudden switch in the buying and selling pattern of the customers in all over India, which created the growth of e-commerce industry. This switch can also be noticed in the automobile industry. The online penetration of auto sector in the world market is approx. 0.7% in 2019. It was challenging for automobile ecommerce industry to make it successful in India, but eminent players of India have made it possible. To learn the possibilities and success of auto ecommerce industry go through this document.
Home Truths: the housing challenge facing low to middle income BritainResolutionFoundation
Vidhya Alakeson's slides from Resolution Foundation event on housing affordability
Full details at http://www.resolutionfoundation.org/events/home-truths-scale-britains-housing-crisis-and-how-/
#hometruths
Retail Marketing in Rural India – Factors in Favour and StrategiesDr. Amarjeet Singh
Retail industry now accounting for 10% of the
country’s GDP undergoes dynamic changes boosting its
growth still further. The sector grows impressively leading
to production of wide range of products and services.
Rural markets provide great scope for marketers due to
increased revenue and purchase power of the rural
population in India. The rural income is expected to
increase faster due to government policies supporting
agriculture and the earning population that has
temporarily moved out of rural villages to cities for
employment in non-agricultural sectors. Technology in
agriculture has helped to produce quality crops and the
market is ready to give high prices for such products.
Around 60% of the students in the colleges are first
generation graduates who have moved out of their villages
for tertiary education. Thus the life style, likes and
preferences of the rural population keeps changing.
However the huge rural segment is much different from
that of the urban segment and the marketers need to
approach with sustained efforts and special models. The
highly fragmented rural segment’s needs are majorly filled
by unorganized family run Kirana stores and Maligai
shops. The share of organised retail in the country has
risen by 60% and the same is expected to have impact on
the rural market as well. The paper focuses on the growth
of retail market in India, the emerging factors in favour of
rural retail and suggests strategies for rural retailing.
Ground Zero 4.0 | Scaling Up - Event ReportRedSeer
Executive Summary
The report is compiled of all the topics that were discussed at Ground Zero 4.0 and has been
segregated based on RedSeer’s research and panel inputs.
Key Findings:
1. Digital India
2. Retail
3. D2C
4. Education
5. Healthcare
6. Grocery
7. Etailing
eCommerce platforms shipped ~2.5 billion shipments in
FY2020 growing at ~50%+ CAGR in the last 3 years. However,
we expect shipment volume to grow at ~30-35% CAGR for next
5 years.
Some of the key drivers of growth for eCommerce are the
latent demand in Tier-2+ cities, enablement of logistics
networks, infrastructure built by eCommerce platforms (large
horizontals), and new age third-party logistics players in
the last 3-4 years. The investment in logistics networks and
infrastructure has enabled eCommerce platforms to reach
online shoppers beyond metro and tier-1 cities to hinterland in
the country
Prettysecrets.com- A Women Fashion Ecommerce Private LimitedAnkur Suyal
This is one of my internship report with prettysecrets (MTC Ecom Pvt Ltd),Mumbai. Although I didn't have any specific project, I have worked on different areas. During my internship, I worked on three different small projects and hence, the above report contains those study.It was a great experience for me. I hope you will like it.
There has been a sudden switch in the buying and selling pattern of the customers in all over India, which created the growth of e-commerce industry. This switch can also be noticed in the automobile industry. The online penetration of auto sector in the world market is approx. 0.7% in 2019. It was challenging for automobile ecommerce industry to make it successful in India, but eminent players of India have made it possible. To learn the possibilities and success of auto ecommerce industry go through this document.
Home Truths: the housing challenge facing low to middle income BritainResolutionFoundation
Vidhya Alakeson's slides from Resolution Foundation event on housing affordability
Full details at http://www.resolutionfoundation.org/events/home-truths-scale-britains-housing-crisis-and-how-/
#hometruths
India is the dream destination and growth market for the world in terms of expansion of commerce and Digital India initiatives is one among them which can play a significant role for urban & rural India to transform into digitally empowered knowledge economy as well as for the overseas firms.
The CII TELECOM Convergence Summit, which was held on 18 Sep 2015 at New Delhi, highlighted the significant areas in literary form and those are Internet of Things(IoT), Digital Commerce and Cyber Security and without considering the literary forms a Digital India dream is not thinkable. The Knowledge Partner was Deloitte. Digital Revolution: Forward Path for Telecom, a CII-Deloitte publication was released at the Summit. Download from here: http://goo.gl/0JeMC0
UK economy is showing signs of posting a strong pull-back. China on the other hand is facing the prospects of a slower growth this year. We cover this in the section on *Global Trends* in this month’s issue of Economy Matters.
In the section on *Domestic Trends*, we discuss the trends emanating out of the recent releases on GDP, Balance of Payments, IIP and Inflation during the month of February 2014.
In *Investment Tracker*, we analyse the latest data on investment proposals.
The *Sectoral* spotlight for this issue is on Travel & Tourism, which holds strategic importance in the Indian economy providing several socio economic benefits.
In *Focus of the Month*, we discuss the employment creation challenge that the economy is facing currently. In addition to our own analysis, we have carried articles from eminent experts on the subject.
The 2nd edition of the Inclusive Development & Sustainability Conference, based on the theme Responsible Growth: Towards a Sustainable Future, was held in Mumbai on 20 August 2015 and centered on discussions related to the way forward for India to becoming a Responsible Growth economy through suitable enablers, with proper facilitation of resource-efficient greening of the economy, with specific focus on Waste, Water and Energy.
Indian Female Innerwear’s $12 Billion OpportunityRedSeer
India currently stands at quite an interesting juncture of consumption. It consists of a majority of young populace who are mainly driving the growth of income per capita and consumption. India’s GNI (Gross National Income) per capita was US$ 2,120 in 2019 which is lower than the US (US$ 65,850) and China (US$ 10,410). However, India’s GNI per capita is expected to grow at 7% between 2019 and 2025, which is faster than US’ and China’s expected growth rates between 2019 and 2025 at 2.9% and 6.1% respectively.
India’s strong consumption story relies on its demographic structure, which, at this
point in time, is highly favourable compared to most other emerging nations. As per
the UN population statistics, this favourable demographic dividend will last for another
25–30 years. Before that, most other emerging nations would have already begun to
witness a slowdown in the growth of young (working-age) population.
The ensuing benefits with regard to the rising income and household spending would
provide a significant boost to the consumption-driven growth story of India. A glimpse
of the changing pattern of India’s consumption is already visible in the breakdown
of private final consumption spending data provided by the government. There is
a marked increase in spending on lifestyle products and services such as hotels,
mobiles, transportation and other miscellaneous goods. As against that, spending on
essentials has only remained stable.
International retailers are well aware of these benefits that the Indian economy offers.
Barring few legislative challenges that could be tackled through the policy reforms and
opening up of the retail sector, retailers have often expressed their intention to enter
and invest in India’s attractive retail sector. This is very well reflected in AT Kearney’s
Global Retail Development Index 2012, where India ranks as the fifth most attractive
retail market for international retailers. The retail sector is a significant contributor to India’s economic activity. Though a
direct measurement of the retail sector is difficult to derive through government
statistics, the trade, hotels and restaurant sectors come close to giving us an
estimate of its contribution. That component, in which retail (both organised and
unorganised) is the dominant activity, accounts for around 18% of India’s GDP.
Within the services sector of India, this component is the largest contributor
to the economy. Many institutions, however, may not agree with this possibly
understated measurement of the retail sector, as it may not accurately account
for the unorganised sector. For instance, as per the estimates of the Associated
Chamber of Commerce and Industry (ASSOCHAM) presented in one of its retail
reports of 2012, the contribution of both organised and unorganised retail stood
at 22% of GDP. This would mean that Indian retail sector size should measure
closer to INR 19.2 trillion in 2012. Leading research institutions such as AT
Kearney and ASSOCHAM estimate this sector to grow at around 15% y-o-y over
the next three–five years as against a 12%–13% nominal growth of India’s GDP
estimated by the International Monetary Fund (IMF). Going by that logic, the retail
sector should reach a size of INR 34 trillion by 2016. This is a significant growth.
The sector is also an important contributor towards the socioeconomic well-being
of the economy as it employs close to 9.4% of India’s labour force, as per the
association.
According to "Tata Strategic Management Group (TSMG) " The organized Food & Grocery retail in India could grow to Rs. 1750 Billion (at current prices) by 2015 representing ~11% of overall F&G sales.However to achieve that, The Indian retail faces several economic structural challenges both across the demand side and supply side.This presentation by BCG analyses some of indian retail trends these sectors-
The May edition of the Multilateral Newsletter highlights the key deliberations from the Forum and provides the key recommendations made by the OECD stakeholders. In addition, the edition covers major happenings at the World Bank, Asian Development Bank (ADB), B20 and International Labour Organisation (ILO).
Micro, Small and Medium Enterprises (MSMEs) sector is the backbone of the national economic structure and has acted as the bulwark for the Indian economy, providing it resilience to fend off global economic shocks and adversities. The development of the sector is extremely critical to meet the national imperatives of financial inclusion and generation of significant levels of employment across urban, rurban and rural areas and to catalyse socio-economic transformation.
Easy access to credit and finance remains one of the many challenges faced by the sector. Hence, in view of the sector's importance in the overall economic landscape, it is critical the MSME sector develops through the concerted efforts of various stakeholders, including banks and financial institutions, equity funds, industry majors and MNCs, regulators across various ministries at the Center and in the States, and trade associations, together, to create a forward-looking framework and ecosystem. The competitiveness of the MSME sector is critical for sustaining economic growth.
It’s a matter of concern that 600 million people in India face high to extreme water stress in the country. About three-fourths of the households in the country do not have drinking water at their premise. With nearly 70% of water being contaminated, India is placed at 120th amongst 122 countries in the water quality index. It’s a fact that water is a State subject and its optimal utilization and management lies predominantly within the domain of the States. This index is an attempt to budge States and UTs towards
efficient and optimal utilization of water and recycling thereof with a sense of urgency.
GST, the single taxation regime, was implemented a year back and though there were some initial implementation issues, as is the case with any system for the first time, it is safe to say that the GST has been the biggest tax reform of Independent India.
Cyberspace is rapidly transforming our lives – how we live, interact, govern and create value. With the JAM (Jan Dhan, Aadhaar and Mobile) trinity, India is at the forefront of global digital transformation. “Digital India” is being hailed as the world's largest technology led programme of its kind.
While internet, smartphones and modern information and
communication devices have been great force multipliers, endless connectivity and proliferation of IoT devices is giving rise to vulnerabilities, risks and concerns. Cyber security is today ranked among top threats by governments and corporates. Heightened concerns about data security and privacy have resulted in a spate of regulations in India and across the world. India is in the process of discussing and enacting its own comprehensive data security and privacy regulation, as well as vertical specific ones. Cyber security is an ecosystem where laws, organisations, skills, cooperation and
technical implementation would need to be in harmony to be
effective.
Overall, a robust regulatory framework based on global and
country-specific regulations, development of a holistic cyber
security eco-system (academia and industry as well as
entrepreneurial) and a coordinated global approach through
proactive cyber diplomacy would help to secure cyber space and promote confidence and trust of key stakeholders including
citizens, businesses, political and security leaders.
CII has been actively working in the cyber security space. The CII Task Force on Public Private Partnership for Security of the Cyber Space has been set up to bring about improvements in the legal framework to strengthen and maintain a safe cyberspace ecosystem by capacity building through education and training programmes. We would facilitate collaboration and cooperation between Government and Industry in the area of cyber security in general and protection of critical information infrastructure in particular, covering cyber threats, vulnerabilities, breaches, potential protective measures, and adoption of best practices.
Delhi, the capital of India, has emerged as a major commercial capital and industrial hub of India. It is home to a wide range of industries including textiles, electrical and electronics, IT &ITeS services, hotel and tourism, which have contributed immensely to the economic and industrial growth of the country. Nearly 88% of the SMEs in Delhi revealed that this cluster is as an attractive destination for conducting business. Delhi has become an attractive business and tourist destination. This is driven by its improved infrastructure, good connectivity with other Asian and western regions, ease of access to market and availability of skilled labor among others. Consequently, it has emerged as
one of the most preferred investment and business destinations.
The state government of Maharashtra has been at the forefront in creating a conducive business environment that fosters globally competitive firms. Business reforms introduced both by the Central as well as the state government have played a critical role in India’s 30 spots improvement in the Doing Business ranking for 2018.
The State, under the Business Reforms Action Plan (BRAP) 2016, has implemented over 90 per cent reforms in 7 out of 10 parameters, including labour registration, utility connections, single window system, environment registration, among others. These policy reforms have significantly helped in the reduction in time and cost of doing business for the industry, thereby
establishing Maharashtra as one of the top investment destinations in the country.
This report provides the key highlights of the select initiatives on ease of doing reforms in Maharashtra. With a view to provide on-ground impact of these initiatives, the Report also captures industry views on various aspects of business reforms.
The March-April edition of the Multilateral Newsletter gives insights on the key happenings at the various multilateral institutions and highlights the key discussions and deliberations at the informal WTO Ministerial Meeting held in New Delhi.
WTO plays a vital role by bringing stability and predictability to the multilateral trading system. It is a collective responsibility of WTO members to address the challenges faced by the system and putting the economies back on steady and meaningful way forward.
Several proposals and initiatives on investment facilitation were tabled at the WTO in the run-up to the 11th Ministerial Conference. The proponents advocated discussions on Investment Facilitation within the WTO framework. However, there was no consensus on initiating negotiations, or even establishing a Work Programme, on Investment Facilitation. A clear need of more work to look at all aspects of a potential multilateral rules on Investment, particularly on its impact on domestic policy space was stated.
In order to deepen the understanding between the member it is important that an open, transparent and inclusive approach of decision making for the various interventions. The informal WTO Ministerial gathering in New Delhi saw convergence of around 53 members representing a broad spectrum of the WTO membership.
CII, as an Industry Institution is cognizant of the need for India to engage constructively in some of the new issues being discussed under the WTO framework.
Businesses are gradually recognizing that ethics means good business. It is believed that well-run and trustworthy
companies are more likely to attract greater investment opportunities, which enables them to innovate and expand, and
generate wealth and jobs. Good corporate governance practices are regarded as providing an 'extra' edge to companies
to enhance their image and stay ahead in an intensely competitive business environment. This would help them imbibe
universally accepted values of ethics and good governance—accountability, transparency, responsibility and
responsiveness to stake holders. Besides, it would also mean looking beyond achieving mere economic sustainability to
include social and environmental sustainability as well. Many corporates are adhering to sustainable business practices
and many more are likely to follow suit in the time to come.
On the domestic front, CII expects economic growth to bounce back to 7.3-7.7 per cent in FY19 from the estimated 6.6
per cent in FY18. The prognosis of improved rural consumption and a recovery in private investment will support
growth, even as the debilitating effects of demonetisation and GSTimplementation will fade away
The Commuique May 2018 edition discusses the cover story
on 'Resolving Insolvency in India'
The Insolvency and Bankruptcy Code (IBC) 2016, is one of
the biggest regulatory reforms corporate India has witnessed
in recent times.
It also features 'UK-India CEO Forum Meeting ', 'CII CEOs Delegation to 11th Commonwealth Business Forum 2018', 'Four Transformations of the Global Energy Market', Economy pieces on 'The Innovation Paradox' & 'Can the Lion Conquer the Forest?' along with a piece on 'India-Africa Economic Partnership'.
The government of India has, in the past few years, accorded an utmost priority to the Ease of Doing Business (EoDB). The accent is on simplification of regulations and use of technology to make the compliance more efficient for businesses. Apart from the Centre, the States are also being encouraged to implement business reforms in the spirit of competitive federalism, to foster reforms at the sub-national level. The measures are aimed at creating a conducive business environment, which is a key to facilitating growth and creating jobs. Thanks to these measures, India’s EoDB ranking, captured by the World Bank, has improved by 42 spots since 2014 to touch the 100th position now. The Prime Minister envisions India among the top 50 nations in the next couple of years.
While business reforms are being undertaken at a rapid pace and large scale, cutting across Central as well as state levels, it is imperative that awareness about these developments is created among stakeholders and regular feedback is generated to address the gaps in the implementation of reforms. Identification of pending issues and suggesting possible solutions are equally vital. It is also important to identify the best practices within and outside the country, which are considered for implementation by the needy states.
The report reflects on the role of broadband connectivity and the multiplier effect it has on the larger ecosystem. India is ripe for a Digital rethink, with both government and industry aligning their efforts toward a broadband powered Digital India. Broadband has the power to enable the gigabit society that is always connected. Broadband connectivity has changed the way people
communicate, socialise, create, sell, shop and work. India’s digital consumption patterns highlights the evolution. On an average Indians spend 200 minutes on mobile every day, with the second highest app downloads globally. Almost 79% of the web traffic in India is on mobile.
To realise the Digital India dream, there is a need to strengthen the broadband backbone, which forms a key pillar of this transformation. This report highlights the need for future ready and robust broadband infrastructure and the requisite efforts for expediting its reach.
South Africa and India share a rich past and bright future. India has transitioned from being South Africa’s political ally to being a vibrant economic partner. Despite challenges, the opportunity for increasing the value of bilateral trade between the two countries is growing exponentially each year.
South Africa and India have nurtured a bilateral relationship since the 1860s, when the first Indians arrived in South Africa. India was one of the first countries that rallied at the United Nations in support of the anti apartheid movement in South Africa. The strong bond established between the two countries during the struggle for democracy in South Africa became further entrenched in post-apartheid South Africa.
Most global businesses recognise South Africa as the most favourable destination in Africa for making long-term investments. The country offers a stable political and economic environment with established institutions. Policies and procedures are well articulated and consistent, and it offers a free and competitive environment with open-minded consumers. South Africa provides the most stable and technologically viable environment for Indian companies wishing to establish a base from which to expand across the continent. As a gateway to Africa, it is renowned for its infrastructure, skills pool and expertise.
Our world is changing at an unprecedented pace, driven by a new digital economy. Companies across sectors are keen to become more efficient, disruptive, and differentiated, by using new technologies and supported by an ecosystem of customers, partners, and technology leaders. New-age technologies such as Artificial Intelligence (AI), Augmented Reality (AR), Blockchain, Machine Learning, 3D printing, and IoT are gaining more and more importance and acceptance.
India has all the ingredients in place to leverage this innovation and technological advantage in the long run, including university graduates, public institutes and corporates. However, India’s gross expenditure on R&D as a proportion of GDP (GERD) is less than 0.7% as of 2014-15 and within this, the share of industry is just 30%. Further, the vast SME sector needs to scale up technology infusion for higher productivity.
This is the fifth edition of the Grant Thornton India meets Britain Tracker, developed in collaboration with the Confederation of Indian Industry. The India Tracker identifies the fastest-growing Indian companies in the UK, as well as the top Indian employers. It provides insight into the evolving scale, business activities, locations and performance of the Indian-owned companies who are making the biggest impact in the UK.
This year, our research identified approximately 800 Indian companies operating in the UK, with combined revenues of £46.4 billion (£47.5 billion in 2017). Together, they paid £360 million in corporation tax (£275.7 million in 2017) and employed 104,932 people (105,268 in 2017). This shows the continued importance of the contribution that Indian companies make to the UK economy.
The Make in India initiative of the government which lays emphasis on domestic manufacturing, indigenization and import substitution, is expected to pave the way for making the Indian defence sector self-sufficient.Encouragingly, the Indian industry is now actively engagedand is partnering with the government in building a modern and best-in-class defence systems, equipment and components which should strengthen our forces and make the country more self-reliant. The formation of the Society of Indian Defence Manufacturers (SIDM) as an apex body of the Indian defence industry is critical in this regard. SIDM is expected to play a proactive role as an advocate, catalyst and facilitator for building the growth and capability of the defence industry in India. Given the rising importance of buttressing the Make in India programme for expanding the capacity of the Indian defence sector, in this issue of Economy Matters, a few SIDM office bearers and defence experts present their insights into this crucial topic.
As India integrates deeper into the global economy, it is becoming increasingly clear that the country needs to focus both on meeting international competition and its own developmental challenges.
The Government launched several initiatives last year, such as Make in India, Skill India, and Digital India, among others, towards make the vision of integrated inclusive development a reality.
For industry, grappling with the challenges of disruptive technologies, restrictive trade laws, environmental responsibilities and more demanding and discerning customers, the imperative is for sharper focus on producing excellent goods and services, along with building skills, generating jobs, and mainstreaming the marginalized.
Personal and freight mobility are important aspects of economic development and therefore create a significant footprint on the natural environment, especially on the ambient air quality. Vehicular emissions have been identified as one of the sources of air pollutants, specially PM 2.5, as per source apportionment study of IIT-Kanpur commissioned by Government of NCT of Delhi in the year 2015 (Sharma and Dikshit, 2016). Although there are other contributors to air pollution but the vehicular pollution remains a major non-point source. Efforts are needed for reducing the overall impact of the same. Another distinguishing feature of Delhi’s transportation system is the medium and heavy commercial vehicles (MHCVs) which are 2.5% of the total vehicular population but are responsible for over 65% of the total vehicular pollution as well as fuel consumption.
Under CII-NITI Aayog 'Cleaner Air Better Life Initiative', the task force on clean transportation has undertaken a consultative process to identify seven areas of action towards mitigation of air pollution in Delhi and National Capital Region (NCR). To begin with, it proposes mobility reforms to induce a more fundamental change from private vehicle towards sustainable means of transportation such as public and shared transportation. Further, limiting high-mileage polluting vehicles, strengthening Pollution-Under-Control (PUC) regime, allowing retailing of bio-fuels, promoting electric-mobility, decongesting traffic hotspots and retrofitting solutions are recommended by the task force, as elaborated.
Confederation of Indian Industry (CII) takes immense pleasure in presenting the third edition of Annual CSR Tracker 2017. Similar to the last two editions, this is the most comprehensive analysis of CSR disclosures of Bombay Stock Exchange (BSE-listed) companies obligated to practice CSR as per the Companies Act, 2013.
The Annual CSR Tracker 2017 is based on disclosures of 1,522 companies as compared to 1,270 companies in 2016 and 1,181 in 2015. Disclosures are broken into approximately, 41 indicators spread across six aspects of CSR legislation: governance, policy, financials, spends as per Schedule VII, spend channels, and spend locations. Also included is beneficiary data that companies voluntarily disclose in their annual reports.
At CII Indian Women Network, we are driven by the imperative that Indian women become a core critical mass of the workforce to bring about the transformational change in attitude and behavior. We have also recognized the importance of some amazing women role models who can inspire the future generation into believing that there are no limits to what a woman can achieve. One critical aspect is our own self-belief and innermost conviction that will ultimately help us triumph in our relentless struggle for gender equality. It is a pleasure to share this comprehensive report with you that captures the universe of several variables that will impact our future progress.
3. The Indian Retail Medley: Coexistence and Growth of Unorganized, Organized and Online Retail The Indian Retail Medley: Coexistence and Growth of Unorganized, Organized and Online Retail
4 5
Source: Wazir Advisors
India is one of the fastest-growing
retail markets in the world. The
country boasts a population of 1.25Bn
with a large and growing middle class
(households earning between INR
150,000/USD 2,500 and INR 850,000/
USD 14,200 per year1
) of 640Mn
projected to reach 900Mn by 2021. Add
to that the age profile of Indians, 50%
below 25 years of age, and we have a
winning recipe.
India’s retail market is expected to
cross USD 2 Trillion by 2025 from
the current market size of USD
500-550 Bn. The Indian retail sector
currently accounts for over 20% of
the country’s gross domestic product
(GDP USD 2.308 Trillion - Nominal,
April 20152
) and contributes 8% to
total employment, employing an
estimated 40-45Mn people. There
are an estimated 12-14 Mn retailers,
making India a country with one of
the highest retail densities. The sector
is expected to grow at a CAGR of
14% over the next 10 years and will
remain one of the top growth markets
globally, thus evincing keen interest
from global players as well as Indian
Landscaping the Retail Play
Source: Wazir Analysis based on published data
Source: Published Data1
Source: Profitable Growth Strategies for Global Emerging Middle, PwC 2012;
2
Source: Report on Selected Countries – IMF 2015
4. The Indian Retail Medley: Coexistence and Growth of Unorganized, Organized and Online Retail The Indian Retail Medley: Coexistence and Growth of Unorganized, Organized and Online Retail
6 7
Source: Wazir Analysis based on published data
conglomerates, looking at niche retail
sectors. The projected growth in the
sector will further create 10-12Mn
direct as well as indirect jobs by
2025, as various associated sectors
like warehousing and logistics,
infrastructure etc. also get a boost
from this retail growth.
Within retail, the organized segment
is expected to grow at a CAGR of
22%, much faster than traditional
retail, which will grow at 13% CAGR.
However even with high growth, the
organized sector will capture just
about 15% share of retail market by
2025, up from 8% today.
With a high growth retail market,
the retail infrastructure in India is
also going to improve. More than
600 malls have come up in the last
10 years with 100 plus malls having
opened up in the last 24-30 months.
Average leasable area of the malls
has increased by over 35% in the last
3 years. This is expected to further
increase by about 20% over the next
three years.
Online retailing in India has emerged
strongly over the past few years
on account of the digital revolution
taking place in the country. India is
expected to become the world’s fastest
growing e-commerce market on the
back of robust investment activity in
the sector and the rapid increase in
internet users.
The Indian ecommerce industry has
grown rapidly in the last 5 years
to reach USD 17 Bn in 2014. The
segment is expected to grow to over
USD 60 Bn by 2017, making India the
fastest growing ecommerce market in
the APAC region. While online travel
dominates the ecommerce industry
with ~70% market share, etailing has
the second largest share of ~20%. The
online e-retail market is expected to
rise from USD 3.5 Bn in 2014 to USD
5 Bn in 2015 to over USD 130 Bn
by 2025. The e-retail market is thus
the fastest growing segment online,
and will continue to be the biggest
e-commerce growth driver, with an
expected CAGR of over 60% over the
next few years.
The major reasons for this growth is
increasing penetration of technology
in tier-II, tier-III and tier IV cities,
increased use of mobile internet,
need for ease of shopping, heavy
discounts offered by online portals,
and better payment and return
policies. Internet is changing the way
people think, interact and consume.
It touches every step of purchase
cycle viz. ‘pre-purchase’, ‘purchase’
& ‘post-purchase’. In India, internet
penetration currently at 19% is at the
cusp of an exponential growth. 250
Mn people are currently connected to
the internet in India and this number
is expected to reach 700 Mn by 2025.
Retail Market Drivers
1. Demographic dividend
India has the largest Gen Y
population in the world. The
median age in India is 27 years
(compared to 37.6 years in the
United States) and almost half
the population is under 25 years
old. As this population joins the
workforce and gets more money
in their hands, the retail spends
increase.
2. Increasing incomes fueling
aspirations
Average Household Income of
Indians is expected to grow three
fold from USD 6,393 in 2010
to USD 18,448 in 20203
. With
increase in disposable incomes the
aspiration levels are also spiraling
3
Source: NCAER
Source: Internet and Mobile Association of India (IAMAI)
5. The Indian Retail Medley: Coexistence and Growth of Unorganized, Organized and Online Retail The Indian Retail Medley: Coexistence and Growth of Unorganized, Organized and Online Retail
8 9
upwards and private consumption
is expected to increase from
about 60% to 63% of GDP in the
same period. This double impact
of increasing incomes as well as
expenditure / consumption is very
favorable to the retail market
economics.
Today consumers in even tier-
II, tier-III and tier-IV cities
are spending much more on
products and services, than they
did a decade ago. These cities
are emerging as “Hot-spot” of
consumption both for brick and
mortar and online retailers.
Taking cue, organized retailers
are targeting these cities with
opening of new stores, and offline
retailers are improving their last
mile delivery capability to be
able to serve smaller and far-
flung markets cost effectively.
Mall development activity is also
picking up at rapid speed in these
small towns & cities, creating
quality space for retailers.
A key factor for growing
consumption is the attitude shift
amongst the Indian consumer.
Their buying habits are shifting
from need-based purchase to
aspiration-based purchase and
the “guilt” related to spending
which was inherent in consumers
of yesteryears has suddenly
vanished. Further, the consumer’s
product choice is becoming
increasingly biased towards
brands, across all categories from
food and grocery to fashion and
lifestyle and even services. Indians
are now shifting from traditional
to modern “branded” experiences.
3. Rurbanization and urbanization
While on one hand masses are
moving from rural to urban areas
looking for jobs, on the other hand
rural areas are being infused
with urban patterns and services
(Rurbanization) and cities are
engulfing villages as they expand.
In 2011, 31% of India’s population
was urban, up from ~28% in 20014
.
By 2030, 40% of the population is
expected to be urban5
. Between
2001 and 2011, 32% urban growth
was due to reclassification of
towns and expansion of urban
areas, leading to explosive growth
in farmland prices and rise of the
“correlate” villagers.
Rurbanization and Urbanization
are putting more money in the
hands of people and are creating
new aspirations and new demand
which when supported by
better availability will increase
consumptions and hence the retail
market.
4. Increasing retail reach through the
online channel
While there was always latent
demand even in underserved
areas, online retail with its added
penetration has made all products
4
Source: Census India 2011;
5
Source: Indian Institute for Human Settlement 2011
available even in the remotest and
smallest towns. This exponential
availability has created its own
demand. Today 50% or more sales
for most online players comes
from tier II cities and below
and this percentage is expected
to go up as the connectivity in
small towns increases. Further,
growth of mobile–commerce
and use of native languages for
communication will lead to new
levels of technology led commerce.
Summarizing, the retail market is on
sound footing and though the market
will have its own cycles of good and
not so good times, from a medium
to long term perspective the market
outlook is very positive for
all participants.
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10 11
Co-existence of Unorganized,
Organized and Online Retailers
The Indian market is unique in
its own way and is a medley of
extremes. On one side there are
lakhs of street hawkers and small
family run traditional stores with
the most archaic retail practices
and on the other side are the most
technologically advanced players with
complex algorithms to predict what
consumers will want to buy in the
future. Being the land of paradoxes
that it is, it however has place for
both. Wazir believes that
the unorganized, organized and online
players will co-exist in the Indian
retail ecosystem and will expand the
market for each other, as all have
unique strengths and the sector is
large enough to accommodate all
participants. Wazir believes that
unique partnership models will
emerge as the retail market matures
and this partnership will further
push the sector growth.
To a large extent this co-existence will
be driven by the consumer who will
not shun one channel for the other
and will seamlessly switch between
channels. The consumer’s approach
to channel selection will thus be
“inclusive” and not “exclusive”.
The point of view that as India
becomes richer, its consumers would
shirk roadside vendors, kiranas and
other mom and pop stores to move
to glitzy, air-conditioned stores with
wide aisles and massive ranges has
already been proven wrong. Small
and medium retailers, continue to
grow and dominate the market,
while modern formats increase their
footprint. The consumer shops at
unorganized as well as organized
stores based on his needs, convenience
and perceived value proposition. The
anxiety that traditional unorganized
retailer thus had about modern
organized retailers wiping them out
has settled to a large extent.
Similarly, the whole anxiety that
organized retailers have about online
players eating into their markets
will subside in the long run as the
“discrepancies” across channels
disappear and the play becomes
fairer. Currently the tussle is not
between channels but between the
price propositions and various
customer acquisition tactics adopted
by the online channel. This is already
seeing a phase out, as the sector
matures. Online retailers too will
have to establish a value proposition
beyond price and compete on fair
terms with other channels, with
brand owners playing the referee.
This co-existence of unorganized,
organized and online retail can be
seen in many other markets too. In
the two decades since China first
opened its doors to Foreign Direct
Investment (FDI) in the retail sector,
Source: eMarketer
Source: Published data
7. The Indian Retail Medley: Coexistence and Growth of Unorganized, Organized and Online Retail The Indian Retail Medley: Coexistence and Growth of Unorganized, Organized and Online Retail
12 13
neighborhood markets have continued
to coexist with big Chinese retail
chains that have emerged. Organized
retail has only been able to capture
about 20-22% share of retail even
after large global players focused
on growth in the Chinese market.
Ecommerce further accounts for 10%
of the organized retail sales in China.
In countries like Indonesia, South
Korea and Brazil too, unorganized,
organized and online retailers co-exist
and compete under protection laws
that define the market for each.
Traditional / Unorganized
Retail has Unique
Strengths
As against the concerns of many,
Wazir believes that traditional
unorganized retailers will continue to
grow due to their inherent strengths
and hyper convenience. There may
be temporary reshuffling of market
shares, the timing for which will vary
from one micro market to another,
and from category to category, but
overall the absolute revenues for local
stores will continue to grow. There
may however be fewer new mom
and pop stores as the organized and
online retailers may capture the new
demand that is generated.
Detailed below are some of the unique
strengths of unorganized retailers
that will continue to give it the push
for growth:
1. Consumer preference for
traditional stores
A large number of retailers
continue to prefer unorganized
retailers over organized ones for
the following reasons:
• Convenience in terms of locational
proximity and quick service
• Credit facility provided
• Longer operating hours
• Goodwill and relationship with the
retail shop owner
• Personalization in service
Traditional traders are also viewed
as cheaper although this may
not be the actual case. Modern
organized stores comparatively
offer greater variety but it is not as
big a competitive edge as a cluster
of stores, together, can offer
almost the same range, especially
in packaged products. Further
traditional retailers do keep
most of the high selling products,
so except for some “long tail”
products the perceived advantage
is not very high.
For shoppers in India, foods and
other regular purchase items
bought two to three times a
week are generally purchased
from traditional retailers.
Supermarkets and other organized
formats appeal more to the
affluent consumers and for bulk
or less regular purchases such as
packaged foods, certain FMCG
goods and staples, such as rice
and pulses. In general though,
even affluent consumers prefer
traditional stores, as they are
closer to home and many even
deliver the purchased items with
no additional charge and with very
little threshold bill value.
2. Local orientation of small retailers
The biggest strength and
advantage that a small
neighborhood retailer has over
its larger competitors is its local
orientation. Across categories,
mom and pop stores offer a more
localized assortment and service.
This starts right from being close
to their consumers, understanding
their consumer tastes and needs
and accordingly stocking the right
merchandise.
3. Flexibility
Retail is all about quick decision
making and this is something
that the unorganized retailers
master at. Being mostly owner
managed the decision-making
time for a small retailer is very
small as there is no organizational
hierarchy to approve or disapprove
decisions. Thus, a small retailer
can quickly update stocks as
per the changing demands of
the consumer, hyper-localize his
inventory and pricing decisions
in an instant, something which
organized formats will do in a few
days or maybe weeks. Thus the
local retailer is hyper flexible and
responsive.
4. Lower operating costs
Most unorganized stores are
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14 15
owned and managed by small
business owners and their
families, and many are operated
within premises owned by the
shop owner. Also, in general they
have higher stocking density
than modern stores which are
very particular about the visual
merchandising aspects. Organized
players, on the other hand, are
subject to high operating costs in
the form of rentals and other store
expenses like power, manpower,
IT etc. Thus operating costs are
low for unorganized stores and the
efficiencies high, giving them an
edge.
Also as against the unorganized
retailers, the organized segment
typically has greater enforcement
of taxation and better labor law
adherence.
Overall, though the gross margins
of organized players are higher
than unorganized players, the
gross operating costs are even
higher thus resulting in lower
profitability.
5. Better control
One of the biggest hurdles in
large-scale rollout faced by
organized retailers loaded with
money is the ability to tightly
control far-flung stores and the
limited “ownership” of professional
managers. In unorganized retail,
being owner managed, the
control over everything is much
better resulting in better and
more efficient operations, more
precise inventory planning, lower
wastages and pilferages, etc.
6. Penetration and market segments
catered to
Most organized formats still cater
to the affluent and upper middle
class families. However, there is a
large population of lower income
groups, daily wage earners and
urban poor and their requirements
are significantly different from
others. Local unorganized
stores best understand their
requirements and are suited to
cater to their demands.
Further, organized formats also
lack penetration into smaller
markets and rural areas and
are largely clustered across the
larger towns, leaving a significant
open market for the unorganized
players. In fact, these mom-and-
pop stores continue to be the only
point of sale in rural areas of the
country, for most categories, be it
FMCG, consumer goods or textile
and apparel.
7. Ability to offer and manage credit
The role of credit is still very high
in the Indian market. There are
large sections of people who only
buy on credit, especially in the
smaller towns, rural markets
and even in markets catering to
the lower income groups in large
towns. Local mom and pop stores
are a part of the social fabric of
these areas and are able to give
and manage credit well. These
markets thus are not easily
penetrable for organized chains.
Weakness Analysis
1. Lack of negotiating power with
suppliers
Most unorganized retailers
have lower gross margins than
organized retailers due to the
following reasons:
• Higher negotiating power of the
large organized retailers.
• Investments made by organized
retailers in the supply chain,
resulting in value capture across
the chain. Most supply chains
in India were made to cater
to the unorganized sector and
lacked efficiencies thus requiring
organized retailers to invest to
make the supply chain as per
their needs.
Because of the above, organized
retailers are able to offer
better deals and discounts to
the consumers and give a stiff
competition to unorganized
retailers.
Though there are sourcing
alliances that have been formed
between few unorganized retailers
to negotiate with the suppliers,
such alliances are still in their
infancy and lack the power of
large organized retailers.
2. Lack of efficient retail systems
Modern retail organizations
emphasize on increasing
profitability through efficient
systems and best practices. Some
of these include:
• Focus on increasing customer
footfalls
• Capturing higher share of
customer’s wallet
• Improving sourcing and inventory
stocking efficiencies
• Reducing supply chain wastages
across the multiple handling
points
• Improving product assortment,
depth and width
• Offering differentiated products
and service
• Enhancing the store ambience and
displays
For most small scale unorganized
retailers, these aspects are mostly
fringe issues and are not focused
upon much. Additionally, they are
also not aware of how to address
many of the above through use of
latest technological tools that help
raise efficiency thereby reducing
operational costs.
However, the advent of organized
large brands has educated the
retailers on the benefits and
need to focus on better and more
evolved retail systems. Many
organized retailers, as detailed
later in this paper, are themselves
educating the small retailers on
modern tools and the retail best
practices.
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16 17
3. Lack of credit for modernization
and expansion
Still not given an industry
status, though this has been a
long-standing demand of the
sector, it is very difficult for the
small retailers to raise capital
for modernization and growth.
This negatively impacts their
power to compete head on with
the organized retailers backed by
large companies with financial
muscle.
4. Consumer requirement for better
experiences
As briefly discussed, consumers
are now shifting towards better
experiences and the traditional
retailers may be losing out a set
of customers who largely prefer
experience over convenience.
Especially for lifestyle products,
this shift is more pronounced as
the displays, the communication
and the overall experience is far
superior.
To that extent many unorganized
stores have upgraded themselves
to give a modern look, feel and
experience to its consumers and
have reaped stupendous results
to the tune of 20-100% increase in
sales throughput.
Summarizing, the traditional
unorganized retailers have unique
strengths that they can leverage
to grow in today’s market. It will
however require adaptation to the
new consumer realities and choices
and retailers to open up to new ways
of doing business, taking cue from
the organized retailers. Those who
will adapt to the new environment
will prosper and those who do not
may stagnate.
Organized and Online Retail
as a Growth Platform for
Unorganized Players
Growth of the organized market in
India, nudged the unorganized small
to medium retailers to undertake
a number of steps to become more
competitive and consumer centric.
These range from adding new product
lines and brands to better in store
displays and communication, store
renovation, home delivery, credit
sales, usage of in-store IT including
automated billing machines and
acceptance of credit cards. Further,
this has led to the creation of a sub-
segment within the set of small
retailers – the ‘independent modern
retailer’. These are traditional family
owned retailers or first generation
entrepreneurs who have upgraded
and modernized their stores and have
increased their sales throughput to
match or exceed the throughput of
modern organized retailers. They
now form a third segment within
the Indian retail market, significant
enough for major retail companies
and brands to take into consideration.
These independent retailers combine
the shopping experience of the
larger ‘organized’ counterparts
with the convenience of traditional
“mom & pop” stores, offering a
varied set of add on services such as
home delivery, credit, and discount
programs. Independent retailers are
spreading far and wide across retail
sub-categories including apparel and
accessories, jewelry, footwear, home
products, consumer goods, fast food
(QSR), and many more. Further,
many of these have now expanded to
open multiple stores, though largely
localized in a given geography.
Additionally, beyond competition that
is helping unorganized retailers raise
the bar, they also tend to benefit from
modern trade both directly as well
as indirectly. The various avenues
of partnership between unorganized
retailers, organized retailers, online
retailers and brands are detailed
below.
Direct Partnership
Opportunities between
Unorganized Retailers
and Organized and Online
Retailers
1. Partnering through franchisees
Collaboration between the large
and small retailers is increasing
in every field. Large retailers
are collaborating with small
entrepreneurs to expand their
reach in tier-II and tier-III cities
through franchising route. Bata
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18 19
was among the first franchisor in
India, and the market has since
then matured to offer thousands
of franchising opportunities across
various categories and formats.
Franchising is seen as a route for
brands and retailers to quickly
expand without much capital
deployment. Franchisees get
the advantage of small business
ownership supported by benefits
of a big business network and
the assistance provided by the
franchisor in the initial training
and business startup.
In India, only 4-5% of total retail
sales (organized & unorganized)
totaling about USD 25 Bn is
driven through the franchising
route, as against 50% in US,
indicating huge potential for the
market in future. The Indian
franchising industry is growing at
about 35% per annum driven by
growth of existing players as well
as new entrants, both Indian and
International.
The rate of success in franchising
is higher than a start-up business,
as franchisors have developed
work practices and management,
proven systems and processes and
ongoing training and support for
the franchisees.
2. Online Market places, a new
leverage for small scale businesses
The success of the online
marketplace in India has
encouraged several small
entrepreneurs and businesses to
build their presence online and
benefit from it.
• In addition to the extensive
reach of the online retailers,
these small to medium scale
business have also been able
to piggyback on the existing
supply chain infrastructure
and marketing and advertising
campaigns of the e-commerce
companies. Today the market
is much more leveled for
smaller players than it
ever was and many small
businesses have been able to
do very well for themselves,
driven by the growth of
the online channels. Brand
building, supply chain and
front end capabilities building,
that required time and
resources now come without
much effort and open a huge
market ready to be tapped.
• Technology / E-commerce/
Digitization also offer several
benefits to society enabling
Source: Published data
uninhibited growth of
entrepreneurial ventures,
creating an inclusive
ecosystem, and promoting SME
growth. Technology is creating
new avenues of income for
small entrepreneurs, right
from restaurant owners to
taxi drivers to other SME and
MSMEs.
As such, SMEs across the country
have embraced the e-commerce
model to reach out to and sustain
themselves in both domestic and
international markets.
Online retail has provided that
platform to unorganized retail,
that it always wanted and will
help the local retailer reach out to
consumers across the markets.
3. Online aggregators and social
discovery platforms
The second wave of e-commerce
companies comprised of
aggregators and social discovery
platforms. These allow consumers
to discover products, offers and
updates from brands and stores
around them, across segments
like Fashion, Home Décor and
Lifestyle, Restaurants and
QSRs etc. These companies gave
visibility to small formats stores
and created a new platform for
them to market their products
and services, bringing in new
consumers and sales. A case in
point is Zomato which changed the
fate of many a small restaurants
and eateries, increasing their
business many-folds.
S uccess S tories
Sachit Sharma wasn’t very successful with his
wholesale and retail sari business. However,
since moving on to an online marketplace to sell
his saris, he has witnessed a 35% y-o-y revenue
growth. He now sells his goods online and expects
revenue to rise 100% in the next 2 years.
Hina Hussain, based out of Lucknow, was a
housewife wanting to do something with her free
time. She started selling chikankari products
online and soon discovered that her range was
flying off very fast. She started her own small
manufacturing unit and today sells through
multiple websites.
Prateek Chadda sells computer parts and
accessories from his second floor shop in Nehru
Place. While thousands visit the market daily, only
a fraction climb up to visit his store. To overcome
the locational challenge, Prateek registered
his firm as a seller on a number of online
marketplaces. Today, over 50% of his sales come
from online marketplaces.
Garima Sethi started her designing boutique in
Mumbai and tied up with an online site to sell her
designs. In addition to margins ranging from 30-
40%, visibility for her business has multipled and
so has sales. Her products and her brand name
are well recognized now.
Tariq Ahmed owns a handicraft business which
he moved online to increase domestic presence.
Earlier, he only exported his products. However,
since moving online, he is also able to tap the
domestic market and has seen a growth of
approximately 100% in revenue.
In 2006, Kanika Arora put a up a few pieces of
self-designed jewellery online. Today, she has a
small business selling handmade jewellery online.
While initially she did not have the means to start
a physical store, now she does not plan to have
one, as the online marketplace has become her
business place.
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20 21
Using these platforms, each
business can obtain access to a
dedicated profile, with complete
control over the content and an
interface to update the same
thereby expanding the horizon of
small local retailers beyond brick
& mortar.
Further, it is not just the
pure-play online players that
are creating the e-commerce
opportunities for the retailers, but
even the brands. HUL recently
launched Humarashop.com as a
pilot to tap the grocery segment.
HUL not only helps the ‘kirana’
retailers have an online presence
by creating a different page for
each store, but also carries out the
delivery for them. Humarashop.
com promises to deliver any
product in just two hours
anywhere in the city. Meanwhile,
other players such as Godrej and
Marico are also mulling an online
play.
4. Local stores as delivery
and pickup points
Adding a new dimension, the
small unorganized stores are now
being looked at as delivery and
pickup points for online players.
Smaller cities accounted for nearly
55% sales of large online retailers
in the country in 2014, making
it necessary for these firms to be
able to deliver products in time to
their customers in these locations.
Amazon is piloting the express
delivery service called KiranaNow
in Bangalore and promises
delivery within 4 hours. Many
other leading online players are
also formulating similar strategies
looking at the deep penetration of
the small retail stores. This will
add a new line of revenue for the
small retailers.
Benefits of Growth of
Organized and Online
Retailers to Unorganized
Retailers
1. Technology adoption
Earlier, small retailers managed
their business personally and
management evolved with time.
These businesses were passed
on from generation to generation
within a family and were closely
held. There was little use of
technology or modern retail
systems and this was not just a
factor of the retailers’ mindset, but
also the costs involved. Generally,
small and medium retailers did
not have affordable tools to create
productive insights or extract
important information from huge
amount of transactional data
that was being captured in their
business. And this information is
very important for a business to
derive strategies for its growth.
Growth of modern retail and its
large-scale use of technology has
set in economies of scale and has
lowered the cost of technology,
both hardware and software,
and many other retail inputs.
Also, the organized retailers
have led to the development of
better local solutions, which are
more customized to the Indian
markets. The new generation
entrepreneurs are well aware
of the need of technology to
scale up their business and are
therefore incorporating them into
their business. Advancement of
technology is helping the small-
medium players to grow rapidly
and compete with the larger
brands that have been using these
technologies for years now.
Common areas that a small
retailer can use technology to
improve efficiency are:
• Merchandising and range
planning
• Pricing and promotions
management
• Inventory management
• Supply chain management
• Customer relationship
management
• Accounting and finance
2. Improving the supply chains for
smaller retailers and helping them
become more “organized”
The traditional retail model from
producer to consumer is filled
with inefficiencies, because of
which there are reduced profits for
the retailer. For small retailers,
their problems are compounded
by lack of resources like finance
and knowledge of technology, that
further limits their ability to grow
the business.
In the Indian retail sector,
significant losses are incurred
across the supply chain due to:
• Multiple intermediaries
High number of aggregators,
wholesalers, stockists, etc.
between the producer and
the retailer all adding to the
overall margin structure
• Multiple handling points
High wastages due to multiple
handling points specially in
perishables and commodities
• Poor infrastructure &
inefficient supply chain
Damages, pilferges and
spoilage due to unavailability
of appropriate storage and
protection facilities
Organized retailers have been
trying to improve the situation and
reduce supply chain inefficiencies
by:
• Upgrading infrastructure
By investing capital for proper
handling and storage to reduce
wastage and by collaborating
with large suppliers to reduce
intermediation.
• Innovation
In various technologies that
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22 23
make the supply chain more
responsive and transparent
thereby reducing the
distortions created by the
intermediaries
Innovations in product
packaging and handling to
reduce in transit damages and
pilferages and increasing the
shelf life of products
A resultant of this improvement
in supply chain is that the small-
unorganized retailers also benefit
from the overall betterment of the
ecosystem and get a good price
and reliable supply by leveraging
systems developed for organized
retail.
3. Cash and Carry stores are
organizing the wholesale markets
Cash and Carry stores that cater
to traders, small local shops, as
well as larger businesses, are
creating a new set of opportunities
by organizing the unorganized
supply chain for the small
retailers. Small stores, which
dominate the current retail
landscape in India, do not have
the benefit of economies of scale or
the negotiating power, thus having
a limited selection of products and
little price advantage. Further,
the supply chain has low fill rates,
specifically for remote areas. Cash
and Carry wholesalers’ invest in
creating better and more efficient
supply chains with minimal
intermediaries thus getting rid of
the high distribution inefficiencies,
leading to higher retail margins
for the small shopkeepers.
Cash and Carry players are
pushing their private labels
through the kirana store rather
than the modern retailers. Many
retailers now stock private
labels from Metro Cash & Carry,
Walmart and other organized
wholesale players and earn much
higher margins than what popular
national brands offer. While this is
still limited to certain categories,
consumer’s recognition of the Cash
& Carry players gives credence to
their private labels and helps the
small retailer sell those without
much of a difficulty. The gross
margins in certain categories
could be as much as 100% higher
than what national brands offer,
and small retailers tend to gain
immensely.
Source: nxtinsight.com; P: Planned
Further, to make the small
retailers more competitive and in
sync with the changing trends,
Cash & Carry stores are taking
various steps to help unorganized
retailers understand the modern
retail techniques. Cash & carry
Stores are grooming the small
retailers to:
• Understand evolving market,
study consumer needs and
improve store assortment, and
hygiene
• Improve store layout and
visual merchandising.
Understand and implement
planograms
• Manage inventory in a more
efficient way thereby freeing
the cash locked up in inventory
• Improve store communication,
promotions and customer
service
4. Brands helping small retailers
transform stores
Globally, as well as in India,
organized retailers across
categories and formats have
always promoted private labels
and own brands, which take
away share from distributed
national brands. Private labels
also act as a lever for negotiations
with national brands and help
the retailer get an upper hand
in terms of negotiating power.
National brands thus took the
alternate route of promoting
and supporting unorganized
stores with the purpose of
helping them compete and grow
with the organized players
thus maintaining the power
balance. A case in point is the
Consumer Packaged Goods
(CPG) brands that have actively
worked with local kirana stores
for modernization, in lieu of
shelf space and or preferential
consumer data.
About 5 years back HUL started
the “perfect stores” program
where it attempted to transform
nearly 20,000 mom-and-pop stores
and chemists selling its brands
in 72 cities into one resembling
an organized retail store chain.
These “perfect stores” have set
plans for fixtures and products
display and help the customer
better navigate the store thereby
increasing sales. Between 2010
and 2014, more than a million
stores were converted into “perfect
stores”. While the transformation
has helped retailers increase sales,
they have also helped HUL brands
increase their sales from these
stores thereby creating a win-win
situation for all stakeholders.
5. Space leasing by small retailers
Getting consumer eyeballs is
becoming critical for brands and
no space is considered too small,
particularly those generating
consumer footfalls. As a result,
mom-and-pop stores can now earn
rentals with in-store branding
of large brands. Such marketing
techniques make business sense
13. 25
The Indian Retail Medley: Coexistence and Growth of Unorganized, Organized and Online Retail
24
for both the brand, given its
visibility benefit at the point of
sale, as well as the retailer, given
the additional income.
Large FMCG firms as well as
consumer goods companies
use this advertising space very
effectively, connecting not just
with their customers, but also
keeping the small retailers happy.
This form of advertising is also
beneficial in promoting new
product launches as well as new
schemes, given the direct touch
point with the end customer at the
point of sale.
6. Brands using organized and
unorganized retailers for
improving penetration
Most brands have realized that the
Exclusive Brand Outlets structure
is good for brand building but
cannot be used to penetrate the
smaller towns where demand may
be less than threshold to make
the store commercially viable.
Thus, while there was a time that
prominent brands were focusing
on EBOs and modern trade, most
have now balanced their channel
structure to add traditional
retailers to penetrate the markets
deeper.
7. Partnering to overcome other
infrastructure barriers
A number of other major barriers
to profitable retailing still exist in
India. These include regulatory
challenges, tax issues, inefficient
transportation network, supply
chain complexities, etc. All of
these, together or individually,
place substantial burden on small
and medium retailers who do not
have the volumes to overcome
these hurdles to profitability.
Some of these issues, though,
may be tackled by partnering
with larger brands and retailers
that offer efficient supply chains,
finance, advanced MIS systems
and synergies of scale to overcome
these barriers. Additionally, the
advent of e-commerce has also
made a number of these issues
redundant.
In conclusion, the unorganized
retailer is here to stay and prosper
and the overall growth of retail and
advent of organized formats and
online players will open up more
opportunities for the smaller players.
The sector just needs to be aware
of its competitive advantages and
understand the shifting consumer
preferences, thereby adapting their
offering to make it more relevant for
the new Indian.
The Confederation of Indian Industry
(CII) works to create and sustain
an environment conducive to the
development of India, partnering
industry, Government, and civil
society, through advisory and
consultative processes.
CII is a non-government, not-for-
profit, industry-led and industry-
managed organization, playing a
proactive role in India’s development
process. Founded in 1895, India’s
premier business association has
over 7400 members, from the
private as well as public sectors,
including SMEs and MNCs, and an
indirect membership of over 100,000
enterprises from around 250 national
and regional sectoral industry bodies.
CII charts change by working closely
with Government on policy issues,
interfacing with thought leaders, and
enhancing efficiency, competitiveness
and business opportunities for
industry through a range of
specialized services and strategic
global linkages. It also provides a
platform for consensus-building and
networking on key issues.
Extending its agenda beyond
business, CII assists industry to
identify and execute corporate
citizenship programmes. Partnerships
with civil society organizations carry
forward corporate initiatives for
integrated and inclusive development
across diverse domains including
affirmative action, healthcare,
education, livelihood, diversity
management, skill development,
empowerment of women, and water,
to name a few.
With 64 offices, including 9 Centres of
Excellence, in India, and 7 overseas
offices in Australia, China, Egypt,
France, Singapore, UK, and USA,
as well as institutional partnerships
with 300 counterpart organizations
in 106 countries, CII serves as a
reference point for Indian industry
and the international business
community.
Confederation of Indian Industry, The Mantosh Sondhi Centre,
23, Institutional Area, Lodi Road, New Delhi – 110 003 (India)
T: 91 11 45771000 / 24629994-7 | F: 91 11 24626149
E: info@cii.in | W: www.cii.in
14. 26
At Wazir, we specialize in advising
Indian and International companies to
conceptualize, create and compete in
consumer facing sectors.
From Indian to International corporates,
from Private Equity groups to family
owned businesses, our work centers
around enabling our clients make
the right moves – from strategy, to
implementation, to value delivery and in
building beneficial alliances.
We possess more than 400 man-years
of cumulative team experience across
industries, geographies and economic
conditions. We leverage this to value
add and get that edge in your business.
Powered by our deep insights into the
Indian consumers, spread across age,
social strata, gender and geography, we
put the consumer at the center of the
decision making process and bring a
unique outside-in perspective, imperative
for success in a hyper competitive market.
Report authored by:
Baqar Iftikhar Naqvi | Business Director, Wazir Advisors
Contact us
Harminder Sahni | harminder@wazir.in | +91 98 10 06 62 46
Baqar Naqvi | baqar@wazir.in | +91 99 53 88 37 40
Wazir Advisors Pvt. Ltd. 3rd Floor, Building No. 115, Sector 44 Institutional Area,
Gurgaon - 122 002. National Capital Region, India
T: +91 124 4590 333 | www.wazir.in
Industries we specialize in:
The industries below have been our
primary focus for the past several years.
• Retail
• Packaged Consumer Goods
• Fashion & Lifestyle
• Consumer Electronics
• Beauty & Wellness Services
• Food & Beverages
• Automobiles
• Education
• Healthcare
• Financial Services