Strategic tools for the practising manager

KIT

THIS WEEK: RETAIL IN INDIA "" I

The retail sector in India is highly fragmented. Organised retail in the country is at a nascent stage, accounting for just 4 per cent of the total retail trade.

Almost half of the retail market in India in 2006 was in the rural segment, although the share of the urban market is increasing by almost 5 per cent every 8 to 10 years.

The urban market consists of around 320 million consumers across 5,100 towns accounting for approximately 45 per cent of the total market consumption, with the top 62 cities constituting 50 per cent of the urban market.

Rural India consists of around 720 million consumers across 627,000 villages, of which, the top 17 per cent villages account for 60 per cent of the total rural wealth. This implies that to capture 50 per cent of the market, 100,000 villages need to be reached.

Retail in India is dominated by basic categories, with food and beverage accounting for 65 per cent of the total market, followed by apparel, which is 7 per cent.

A number of intermediaries are involved in reducing the margins of retailers, increasing the cost and complexity of sourcing, and affecting the quality of the final product.

In horticulture, for instance, this wastage is around 20 per cent.

Using this estimate, the total revenue lost due to wastage in horticulture is above Rs 10,000 crore.

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