This blog is all about retail and will have news about Indian and International retail, information and knowledge about all aspects of retail.
I would like everyone to comment on whatever is being written as well as contribute by adding any information or knowledge of retail that you have and would like to share with everyone.
To begin with, would like to share some pertinent information about Rural India
- 72% of the population in India is rural
- There are over 6 lakh villages
- Contributes to almost half the GDP of India
- Has over 36 lac shops
Rural India Market Size is
- Consumer Durable Rs 500 Billion
- FMCG Rs 6500 Billion
- Agri Inputs Rs 4500 Billion
Of particular interest is the following news item on LG's plan for the rural market
"LG GROUP BANKS ON RURAL MARKETS FOR REVENUE GROWTHThe $40-billion global white goods major LG Group expects rural consumers to push its revenues in India this year. In fact, the semi-urban and rural markets are expected to contribute nearly half of LG Electronics India’s revenues in India. The company also plans to enhance its manufacturing capacity by about 30 per cent by deploying innovative processes in its plants, which will translate into greater efficiency, said sources at LG Electronics India. The company, which has expanded its focus areas to the rural markets, now expects 40 per cent contribution from rural sales to its turnover this year, as the rural sector is growing at a pace faster than urban sector resulting in higher disposable incomes and, thus, mounting purchasing power. Sources said that rural markets were untouched by slowdown and "will contribute major in durable sales". LG aims at increasing its revenues from the blooming rural markets. The company hopes to alter its portfolio and model mix for the rural market, and ensure that all segments are represented at the entry level.
Business Line: February 20, 2009 "
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I agree with you Navneet. Today rural India offers opportunities that probably do not exist anywhere else. The challenge that arises for retailers like us is to understand our customer and his needs.
ReplyDeleteThe report of IBEF is interesting. Have added the link to this blog so that everyone else can also go through this
This may sound contradictory to my earlier comment on this topic, but the harsh reality of rural retail is that it is extremely difficult for any organised retailer to make profits from rural retailing in medium term. Huge potential does exist in rural India but then, there is a huge reserves of iron and other matal ores and great potential for mining them from Moon too. Still it does not make business sense to mine metal ores from moon, at least not in near future, due to inherent difficulties and costs involved that will make it unprofitable to do so. Similar is the case with rural retail too.
ReplyDeleteSimple calculations with data pertaining to rural India can make the point clearer.
To read more on this debate, one can visit
www.businessmanagementindia.blogspot.com
I am not saying that it is not worth investing in rural retail. This comment aim only at presenting a contrary point of view regarding rural retail scenario to promote debate on the same.