Organized Retailing in India

Factors that favor the growth of Organized Retail in India

1. This market is among the most fragmented in the world, the combined market share of the top five retailers totals less than 2 percent.

2. India is also a powerhouse in terms of people. In fact, forecasts indicate that the country s population of more than 1 billion could overtake china’s by 2050. Although more than 30% of the populations falls below the poverty line, increasing mobility among the middle and uppers classes, coupled with greater urbanizations resulting in growing demand for retail goods, combined with a favorable background for retail market posed for growth.

3. The government has allowed for 51% FDI in single brand outlets. That means that companies like Nike, Louis Vuitton, Gucci or Reebok can come in as complete owners.

Factors that are unfavorable for the growth of Organized Retail in India
1. Inadequate infrastructure, for example, means that 40% of perishable food produced in the country rots during transportation due to a lack of refrigerated distributions networks.

2. India is not a homogenous market. With 28 different states and a plethora of languages customer and traditions, developing local market knowledge and choosing the best store locations will be critical.

3. India has more than 12 million mom and pop stores that are not likely to idly watch their businesses erode as foreign companies encroach on their territory

4. Other factors include FDI, multiplicity and complexity of taxes, and relatively high cost of real estate.

5. One of the biggest problems faced by companies in this sector is keeping track of the supply chain, as it helps them check stocks which in turn aids in issues such as pilfering and shelf life of products. So IT is still not big in Indian companies.