RURAL INDIA PROMISES GROWTH FOR RETAIL
There may be a slowdown in urban retail, but `Bharat' is still shining for retailers. The next phase of growth is expected to come from rural markets with rural India accounting for almost half of the domestic retail market, which is valued over $300 billion. Rural India is set to witness an economic boom, with per capita income having grown by 50% over the last 10 years, mainly on account of rising commodity prices andimproved productivity. In rural markets, consumers are practical and price sensitive. Even though consumers at the bottom of the pyramid do not seem to have predictable income (which affects purchasing dynamics), the rural market proved to be surprisingly loyal. So if companies get it right they could really reap the rewards, experts added. This is particularly true as changes in the rural economy such as people moving from agriculture into manufacturing, which pays better, are likely to lead to a economic boom. In order to earn brand loyalty in the rural market, product design will need to go beyond ideas like smaller sizes (such as single use sachets) to create genuinely new products that appeal to this segment. Also, with most of the retail markets in cities getting saturated, rural markets offer a sea of opportunity for retailers. Retailers have devised different models to serve rural markets. For instance, ITC promoted `choupal sagar' has a hub-and-spoke model involving farmers. Other examples include Pantaloon Godrej's joint venture (Aadhar), Reliance Retail (Fresh & Fresh Plus), Hindustan Unilever (Shakti), DCM (Hariyali Kisaan Bazaar) and Mahindra & Mahindra (Shublabh).
Source : Times of India: April 08, 2009
Friday, April 10, 2009
Prospects for retail in Rural India
More news on the retail front in Rural India
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The study on Rural Retail says that rural retail market constitutes around 40 per cent of the total size of the retail market of India. According to ASSOCHAM, the size of retail market in India is $280 billion. So the size of rural retail market works out to be $112 billion which is Rs. 5,00,000 crore and is growing around 10 per cent of the size of Indian GDP. This is expected to double in next 4-5 years because of potential factor.
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Conventionally the retailing in rural India was characterized by multiple tiers leading to high costs, low density of shops per village and uneven concentration of shops. The investment capacity of retailers in villages is low resulting in restricted range and variety of products. Poor connectivity of villages through roads result in delayed replenishment of stocks. Restricted media reach in rural areas have resulted in adequate communication of the offers and schemes. The market is largely ridden by poor quality, spurious and fake products. It is large dominance of local and regional brands. The sales volume per outlet is low.
Periodic haats, the mobile markets with around 200-300 stalls, spread around 2-3 acres of land selling miscellaneous products is another feature of conventional rural retailing.
In view of the large investments made by the government in rural infrastructure pushing income and demand level, the prospects for organized retail are seen bright for rural India. With empowerment of rural people with education, employment, higher purchasing power, better media exposure, better connectivity with outside world, they provide a massive unexplored pool of consumers.
Source:Assocham Release: April 07,2009
thanks for the data..interesting indeed.
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