Retailing is the transaction between the seller and consumer for personal consumption .It does not include transaction between the manufacturer, corporate purchase, government purchase and other wholesale purchase. A retailer stocks the goods from the manufacturer and then sells the same to the end user for a marginal profit. In the supply chain that also consists of manufacturing and distribution, retailing is the last link before the product reaches the consumer.
Retail Sector in India
Post liberalization the Retail sector in India is heralded as one of the sunrise industries. It has never been better for the retail sector in India. Today within the booming service sector, retailing is the single biggest contributor in terms of GDP to the National Income. Retailing itself can be further divided into organized and unorganized sector.
Organized retailing came into its own in tandem with the retail boom. Indian corporate like Reliance, ITC and Pantaloon have made foray into this segment along with several foreign brands changing the landscape of retailing in India. It coincided with the high growth in the Indian economy, resulting in greater purchasing power amongst the middle class, which in turn went on a purchasing spree. Other factors like consumer awareness, investments by venture capitalists and private equity firms have also contributed to the growth of organized retail. The growth in the organized retailing has resulted in the establishment of departmental stores, supermarkets, rural retailing, e-retailing and luxury retailing. Each one of these formats has a unique advantage and the scale of operation depends upon factors like average footfalls, sales per sq ft etc. However the process of acquiring license is still a bottleneck for the development of Indian retailing.
The unorganized sector is still dominant in India, since it has the advantage of low investment need. Since retailing is the process of connecting the supplier and consumer, pricing of products is very important in a price conscious market like India. Unorganized retailers play an important role in this regard and are a vital part of the supply chain. If unorganized retail segment positions itself correctly, it can carve a niche for itself in India's booming retail sector.
India's huge rural market has also attracted retail investments and is seen as a viable opportunity for growth by corporate India.ITC launched the countries first rural mall "Chaupal Sagar" with diverse products being offered ranging from FMCG to electronics appliance to automobiles, with a view to provide farmers a one stop center for all their consumption requirements. Many more new trends could possibly be tried in rural markets to unearth the huge potential.
Challenges Faced By The Industry