India’s Retail Outlook

The word ‘retail’ finds its origins in the French-Italian word ‘retailer’ which stands for someone who cuts off or shreds a small piece of an object. The term ‘retailing’ encompasses all activities of marketing and selling products or services to the end consumer for their respective personal or household use. The word ‘retailer’ refers to the person or agent or company or organization who is engaged in getting the goods or services to the end user.

There are predominantly two forms of retail in any country; one which is unorganized and the other being organized. Traditional or unorganized retail encompasses street markets, counter stores such as kirana shops, various kiosks, etc where the ownership and management rests predominantly with one person only. This sector accounts for more than two thirds of the Indian retail pie and requires low skilled labour. These outlets being family owned usually don’t have many overhead costs such as rentals, taxes and other such overheads.

Organized retailing on the other hand encompasses modern retailing destinations such as shopping malls, commercial complexes, etc that offer a wide variety of products of good quality that are also value for money as the retailer is buying in bulk and economies of scale kick in. 

Even though the retail sector is predominantly organized the only advantage is that consumer familiarity that passes from one generation to the next. The sector started transforming towards the late 1990’s with the emergence of the first malls such as Crossroads in Mumbai and Ansal Plaza in New Delhi which also gave rise to multi-brand outlets such as Shopper’s Stop, Lifestyle, Pantaloons, etc. The retail sector contributes over 11% to the country’s GDP out of which only about 3% comes from the organized sector. Even though many international players have entered and exited the space in the past two decades, they face stiff competition from the unorganized sector.

As the sector is witnessing rapid change and transformation apart from newer retail models such as kiosks and franchising along with the emergence of new product categories, the end consumer has started accepting the concept of modern retail. Moreover, malls have also started stepping away from tier I cities to tier II cities and tier III towns where the masses live as the consumer is more excited to see a shopping experience where both food and entertainment are under the same roof.