11-EFFECTS OF RETAIL BOOM - I An Overview of Indian Retail...

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I An Overview of Indian Retail Sector The retail sector has helped in giving strong impetus to overall economic growth as a significant driver of the growth of services sector, which contributes as mush as 54 per cent of GDP. It has strong backward and forward linkages with other sectors like agriculture and industry through stimulating demand for goods and through mass marketing, packaging, storage and transport. Moreover, it creates considerable direct and indirect employment in the economy. Also, the consumers have benefited in terms of wide range of products available in a market. Size of the Modern Retail Sector The emergence of new formats and the evolution of modern retail in India has attracted attention in recent years. [The data sets published by different authorities are not strictly comparable as they are based on surveys, but they give some idea of the trends and prospects.] The retail sector, currently, is said to contribute 10 per cent of India’s GDP (Confederation of Indian Industry), and is expected to grow at a robust rate of 36 per cent per annum by the end of 2008 (Associated Chambers of Commerce and Industry of India, ASSOCHAM). This growth would expand the size of the market to over Rs 14,79,000 crore from its current level of Rs 5,88,000 crore. The Indian retail market is estimated at Rs 9,300 billion and is expected to grow at a compounded rate of 30 per cent over the next five years (Retailers Association of India). Moreover, the retail sector employs over 7 per cent (21 million) of the national workforce (Aggarwal, 2000), the second only to agriculture. The retail density more than doubled between 1978 and 1996 and the number of outlets per 1000 people at an all India level, increased from 3.7 in 1978 to 5.6 in 1996. For the urban sector alone, the shop density increased from 4 per 1000 people in 1978 to 7.6 per 1000 people in 1996 (Venugopal, 2001). Because of their small size, Indian retailers have very little bargaining power with manufacturers, unlike in the case of retailers in developed countries, (Sarma , 2000). Structure of Indian Retail Sector The retail sector is classified broadly into two: Organised Retail Sector and, Unorganised Retail Sector
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The organised segment is mainly characterized by typically large number of retailers, greater enforcement of taxation mechanisms and better labour law monitoring systems. It is not just a stocking and selling, but is more about efficient supply chain management, developing vender relationships, quality customer service, efficient merchandising and timely promotional campaigns. It, however, constitutes a very little share of at around 3 per cent (Rs 300 billion) of the total retail market. (In China 20 per cent of the retail is organized and in the ASEAN countries it is more than 40 per cent - Ministry for Commerce & Industry, February 2005) According to the Retailers Association of India, the share of organised sector to the overall retailing market in India is expected to grow from 3 per cent to 20 per cent in the next 10 years. The KSA Technopak’s
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11-EFFECTS OF RETAIL BOOM - I An Overview of Indian Retail...

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