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was only in the year 2000 that the global management consultancy
AT Kearney put a figure to it: Rs. 400,000 crore
(1 crore = 10 million) which will increase to Rs. 800,000 crore
by the year 2005 an annual increase of 20 per cent.
in India is thoroughly unorganised. There is no supply chain management
perspective. According to a survey b y AT Kearney, an overwhelming
proportion of the Rs. 400,000 crore retail market is UNORGANISED.
In fact, only a Rs. 20,000 crore segment of the market is organised.
much as 96 per cent of the 5 million-plus outlets are smaller
than 500 square feet in area. This means that India per capita
retailing space is about 2 square feet (compared to 16 square
feet in the United States). India's per capita retailing space
is thus the lowest in the world (source: KSA Technopak (I)
Pvt Ltd, the India operation of the US-based Kurt Salmon Associates).
a size of only Rs.20,000 crore, the ORGANISED retail industry
will grow to Rs. 160,000 crore by 2005. The TOTAL retail market,
however, as indicated above will grow 20 per cent annually from
Rs. 400,000 crore in 2000 to Rs. 800,000 crore by 2005 (source:
survey by AT Kearney)
the size, and the geographical, cultural and socio-economic diversity
of India, there is no role model for Indian suppliers and retailers
to adapt or expand in the Indian context.
first challenge facing the organised retail industry in India
is: competition from the unorganised sector. Traditional retailing
has established in India for some centuries. It is a low cost
structure, mostly owner-operated, has negligible real estate and
labour costs and little or no taxes to pay. Consumer familiarity
that runs from generation to generation is one big advantage for
the traditional retailing sector.
contrast, players in the organised sector have big expenses to
meet, and yet have to keep prices low enough to be able to compete
with the traditional sector. High costs for the organised sector
arises from: higher labour costs, social security to employees,
high quality real estate, much bigger premises, comfort facilities
such as air-conditioning, back-up power supply, taxes etc. Organised
retailing also has to cope with the middle class psychology that
the bigger and brighter a sales outlet is, the more expensive
it will be.