Hemant Sachan Research Presentation

A COMPARITIVE STUDY ON ORGANISED AND UNORGANISED RETAILING IN INDIA PRESENTED BY HEMANT SACHAN M0729 SEC-A PGDM

OBJECTIVE OF THE STUDY The objective of my study is to  Know about the retailing in India  Comparative study of the organized retiling sector and unorganized retailing sector

AN OVERVIEW ON GLOBAL RETAIL INDUSTRY Nine retailers belongs to global fortune 100 companies 1

220

Wal-Mart

24 35

62

38

Carrefour

60

46

54

ahold Home Depot

55 56

50

Kroger

68 72

44

83

41

Sears

89

40

Target

Metro

93 100

38

Albertson's

Retailers

RETAIL INDUSTRY IN INDIA INDIA’S retail industry is in the growth stage and with a three year compound annul growth rate of 46.64 percent, retail is the fastest growing sector in the Indian economy. Traditional markets are making way for new formats such as departmental stores, supermarkets, exclusive stores and specialty stores.

Retail trade contributes around 10-11% of India’s GDP and currently employs over 4 core people. Within this, unorganized retailing accounts for 97% of the total retail trade. Traditional forms of low-cost retail trade, from the owner operated local shops and general stores to the handcart and pavement vendors together form the bulk of this sector. In the absence of any significant growth in organized sector employment in India in the manufacturing or services sector, millions are forced to seek their livelihood in the informal sector. Retail trade, which has been a relatively easy business to enter with low capital and infrastructure needs, has acted as a refuge source of income for the unemployed

The Central Statistical Organization (CSO) in its national accounts statistics (NAS) uses the classification of ‘organized and unorganized’ sectors. According to it : “Generally all enterprises which are either registered or come under the purview of nay one of he acts, such as Indian Factories Act, 1948, Mines and Minerals (Regulation and Development) Act, 1957, The Company Law, the central/ states Tax Acts, and the Shops and Establishment Acts of the state governments, are defined as organized sector…..

All unincorporated enterprises and households industries which are not regulated by any acts and which do not maintain any annual reports presenting the profit and loss and the balance sheets are classified as unorganized.”

IMPACT OF SMALL RETAILERS ON THE BIG RETAILLERS The customer favors the small retailer for the low price and services he offers. The small retailer is providing all those services, which supermarkets normally doesn't. such services include telephone order system, credit system, home delivery and face value. More importantly he is available next door; most often the owner himself is present to offer personalized service. This has forced supermarket to offer same range of services as small retailers.

IMPACT OF BIG RETAILERS ON SMALL RETAILERS Retailing in India is in the process of getting more organized and professional. Large retail format supermarkets and shopping malls are set to take over the retail scene. Small retailers no longer remain the primary source for the basic monthly basket. The consumers normally get better prices, quality, selection, and convenience for these purchases at organized retail chain. For example, example if a customer buys 100 items a month, he now buys 80 of them from the supermarket at one go, and remaining 20 as and when required from the smell neighborhood retail out let.

. A number of large domestic business groups have entered the retail trade sector and are expanding their operations aggressively. Several formats of organized retailing like hypermarkets, supermarkets and discount stores are being set up by big business groups besides the ongoing proliferation of shopping malls in the metros and other large cities. This has serious implications for the livelihood of millions of small and unorganized retailers across the country.

FINDING FROM THE STUDY The finding is this that the small retailer will be around because, by his very nature, he will be able to deal with several peculiarities in the Indian consumer psychology. For example,  one myth is that ‘whatever is modern is expensive’. This keeps several potential middle class shoppers from buying from supermarket.  Another myth is that fresh foods that are pre-packaged may not really be fresh.

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Another finding is this that Organized retailing has witnessed considerable growth in India in the last few years and is currently growing at a very fast pace. A recent survey report prepared for the FICCI states that organized retail, estimated as a $ 6.4 billion industry in 2006, is projected to reach $ 23 billion by 2010. The share of organized retail in overall retail sales is projected to jump from around 3% currently to around 910% in the next three years. A number of large domestic business groups have entered the retail trade sector and are expanding their operations aggressively.

RECOMMENDATION Following are my recommendations for unorganized retail sector: Unorganized retail sector consists of small shopkeepers and retailers, they are very vast in number but they don’t have unity, they have to form unity in themselves.  They have to be more focused on making personal relations with the customers.  Have to keep on the bargain.

Recommendation for organized retail sector: The income is rising in the urban middle class families, this will increase their ability to buy branded products.  They also have to work hard on PR services. Because they are facing challenge from both the sectors.  They have to give discounts not only in the seasons but, all the time.

CONCLUSION Thus I can conclude that with the economy opening up, the retail industry, of late is going through several changes. Big players and MNC’s have started to enter the retail industry and a new dimension is being given to the retail business. The survival of the retailer, small or big, has become difficult. Supermarkets are yet to get the great Indian middle class and rural India in their fold. Until then, small retailers will be the most sought after retail entities, especially by those marketers who are keenly looking at penetrating semi-urban and rural areas.

LIMITATION The main limitation of my study is that I have collected my data from secondary sources. So my findings and knowledge is totally depend up on the findings and researches of others.